Category Archives: Sourcing Innovation

RFX Creation – Kicking You When You Are Down (Part III)

In our last two posts we’ve been arguing that the RFX process, at least traditionally, has been unnecessarily manually intensive and painful, almost taking the “strategic” out of “strategic sourcing” as so much manual time and effort is required to get it done that you can lose sight of the cost savings forest as you try to cut your way though the individual trees that continually block your way.

We indicated that much of the manual work that is typically required in RFI and RFP creation is relatively easily automated in an appropriate, modern, system — in addition to being much easier to accomplish in modern interfaces designed for efficiency and productivity — and that is why newcomers continue to rise, and profit, in an enterprise software space that should be mature and crowded enough to prevent this from happening.

We also indicated that a lot of time was required to vet potential suppliers for an RFP (even after an initial RFI round), that an organization might not be able to cull the list even if it wanted to, and that neither of these situations should be the case. Why?

First of all, it should be possible to not only auto-score the models against appropriate thresholds of suitability, defined by industry best practices and fine-tuned over time using machine learning techniques that learn the appropriate characteristics and scoring along multiple axes based upon suppliers you select and suppliers you don’t, but rank the suppliers in suitability based on the RFI alone.

Secondly, a modern platform should be able to absorb industry intelligence to predict quality, cost, and delivery and determine how likely a new supplier will fare against incumbents and market average. And then refine the rankings based on this data.

With this data, you could then predict if it’s (very) likely or (very) unlikely that a supplier would receive an award (now or in the future) and allow you to determine if you want to invite the supplier now or not.

How? RPA, ML, AR, and “AI” integration of these technologies.

How specifically? That’s a discussion for a later article, but hopefully, by now you get our point — most RFX technology is kicking you when you’re already down.

RFX Creation – Kicking You When You Are Down (Part II)

Yesterday we explained how, just from an RFI perspective, many S2P “e-Negotiation” or “e-Sourcing” platforms kicked you when you were down and reeling from an unnecessarily intensive, and painful, supplier discovery process — a process that should be mostly automated (as per our lead up articles). But, as we all know, the RFI is just the first stage of the process.

Once a supplier passes the RFI, you need to

  1. actually create the RFP
  2. determine if you are going to invite a supplier to the RFP (and monitor the process once you do)

Generally speaking, creating an RFP is no walk in the park either as the platform is even less likely to contain a relevant RFP template, especially if you are sourcing direct materials or custom manufactured products and need details on processes, raw materials, warranty, maintenance, and delivery methods as well as detailed cost breakdown models. If the RFI process was manual and painful, the RFP will be ten times as manual and painful.

You will have to:

  • identify the relevant bill of materials for each product (and possibly build them from scratch)
  • identify the non-cost information required at each level (raw material, source, quality specs, etc.)
  • identify the cost models required at each level (and possibly build them from scratch)
  • identify the roll-up models for costs and quality scores
  • identify the evaluation models that you will use
  • put all this together into a cohesive and comprehensive RFI

When all you should have to do is:

  • identify the products you are sourcing

Since a modern system, especially one built for easy direct material sourcing, should automatically, for each product:

  • pull in the relevant bill of materials
  • identify the relevant non-cost information based on the compliance requirements noted in the RFI and organizational policy
  • identify the relevant cost models based on the bill of materials (and preferred production processes)
  • build the roll-up models based on embedded intelligence in the platform and defined relationships between the different levels of the BoM
  • apply a standard evaluation model for the category to the RFI
  • … and integrate all of this into a comprehensive RFP for your manual review

Once you have this RFP, you need to determine if you still want to invite the supplier, especially if you have more potential suppliers than you really need.

And, right now, platforms don’t help you here at all.

You see, you only want to invite the supplier if there is a chance you will actually make an award to the supplier in this, or a future, event. If the quality is too low, the prices are too high, the necessary services do not exist, or the necessary culture is not present, the RFP process will be a waste of time on both sides.

Now, you might say that there’s no way to know this before going through the RFP, but is that really the case?

No.

But we’ll take this up in the next part of this series.

RFX Creation – Kicking You When You Are Down (Part I)

If you are an outside observer of the S2P space, like an enterprise software analyst that covers the more traditional enterprise spaces like (ERP, AP, CRM, etc. ), you might wonder how in this day and age a startup that just offers e-RFX, e-Auction, and basic SIM — technology that has been around for 20 years — could not only survive, but in the case of some new entrants like ScoutRFP and Bonfire (which only have a fraction of the breadth and depth of the market leaders, see their analyst rankings in Spend Matters SolutionMaps) thrive!

Well, it all comes down to usability, efficiency, and effectiveness. Most of the first, and even second, generation platforms only focussed on the third measure of effectiveness, and only measured it from a financial ROI perspective on completed events (not on adoption, categories under management, suppliers under management, etc.). Efficiency only mattered from the viewpoint of the implementation or services team (and only to the degree necessary, if billable hours was a major revenue center, and the teams were keeping up, then efficiency was good enough). And usability, well, the software was digital and that was better than paper — so whatever the platform provided was deemed good enough.

But it wasn’t. And we don’t need to offer any proof. ScoutRFP and Bonfire wouldn’t exist if it was, and niche plays like EC Sourcing would not have not have quietly grown from niche players to full S2C offerings with a constantly expanding customer base that is as large as some of the more prominent S2P players (which, despite the abundance of marketing they throw in your face, only have a few hundred customers).

So why does RFX creation in most platforms kick you when you are already down (in the mud trying to scavenge for potential suppliers, as per our last two pieces on supplier discovery)?

First of all, when it comes to basic supplier qualification RFIs:

  • most platforms have limited templates when it comes to the data you need to collect for regulatory compliance
  • you have to manually identify which templates you will need to collect necessary organizational data, regulatory data, location and production data on the supplier
  • search is limited and determining which templates, generally incomplete, you can start from is difficult
  • new template construction (to build what is not present) or existing template modification is usually painful as it is not responsive drag and drop as it was developed using old-school frameworks on older versions of HTML and not kept up to date
  • you have to manually define gating and scoring scales on each template individually
  • there is limited workflow and you often don’t have the ability to define logical, conditional, workflows which will block a supplier as soon as a mandatory requirement is not met or include a template that is only required if a certain process or restricted material is used — which means you often have to go through multiple rounds (as you can’t ask a supplier to fill out anything not necessary or they won’t even answer the first email)
  • there is limited or no auto-scoring and many fields have to be scored manually

In comparison, a more modern platform will:

  • either provide templates, a repository, or integrations to partners that have the templates you need (or make it easy to auto-build them from document or spreadsheet imports)
  • will index core data requirements, compliance requirements, and industry requirements against products and services you source and automatically identify which data and templates will be required
  • automatically search your library to suggest starting template (sections)
  • help you build templates for newly identified requirements
  • allow you to build, modify, and conditionally link templates in a workflow using drag-and-drop and responsive design
  • automatically define critical gating questions based on organizational policy and mandatory compliance requirements and make it easy for you to define additional gating questions
  • allow for the definition of auto-scoring across all fields and RFI sections
  • auto-score each RFI response for you

Complex RFIs that used to literally take days (upon days) to build in the first (and second) generation platforms can now be built in a matter of hours. (We’ve heard multiple, verifiable, stories of some companies that used to spend two days building an RFX on Industry Leading Platform X switching to someone like EC Sourcing and building the same RFX in 15 minutes. That’s why one of the industry leaders released a brand new, slimmed down, redesigned platform targeted at the mid-market last year. You might want the power of tank, but if it takes way too long to get from 0 to 60, you’ll never use it when everyone else has fighter jets that get to the destination first.)

But if only this was the whole story!

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!