Category Archives: Supplier Information Management

PRGX – The Biggest Analytics Provider You Don’t Know!

For those that do not know it, PRGX would appear to be one of a select number of dominant services provider in the niche market for recovery audit services — a market that unlike other procurement services faces tremendous price pressure for its core recovery, statement and related auditing and profit recovery services.

the doctor and the prophet, PRGX Intro on Spend Matters Pro (membership required)

In particular, PRGX would appear to be a recovery audit specialist for the global retail sector. And that is what they are, but that is not all they are.

PRGX has started to remake itself quietly from within — out of necessity, given these broader market trends — building and acquiring technology capabilities in the spend analytics and supplier management areas, both to expand its relevance and to start driving automation and scale in its core business.

PRGX has built the most complete, and in many ways the most advanced, analytics and recovery solution for the retail sector and, in doing so, has built one of the most complete and advanced analytics and recovery solutions for just about any sector that buys and relies on goods. Pharma, Manufacturing, and Aerospace and Defense, just to name a few, could all benefit intensely from the out-of-the-box PRGX solution.

This is because it has evolved it’s application from a simple recovery analytics application to a full featured analytics solutions with modules for:

  • Payment Analytics
  • Spend Analytics
  • Product Analytics
  • Recovery Avoidance Analytics
  • Supplier Information Management

With the latter two coming through its recent acquisition of Lavante.

It can analyze what you paid (payment analytics), what you should have paid (recovery analytics), what you are spending (spend analytics), how much that is costing you and profiting you on a product level (product analytics), and what suppliers are supplying that product and how they are performing (SIM with a hefty dose of SPM).

And it can do this analysis end to end around a product or category, and allow you to simultaneously see what you ordered, spent, overspent, took in on sales, lost on returns, and profited when all was said and done. It’s one of the most powerful analytics solutions you don’t know about. Stay tuned — there is more to come!

Supplier Solutions – All About the Space …

… of Supplier Enablement. In our recent post about Supplier Networks, we discussed the value wasn’t what the provider typically promoted, but the fact that it greatly decreased the effort required by the supplier to do business. It enabled them to be efficient, whereas most sourcing and procurement applications just suck their time.

So if you are going to buy a supplier management solution, then it better be one that truly, truly, truly enables suppliers. So what does this mean?

Find a solution that focuses suppliers on missing, outlier, and information that can’t be confirmed.

Many solutions just send out regular “please review and correct” alerts and call that supplier information management. But information management isn’t about reminders and checking boxes, it’s about finding issues and fixing them. A good solution identifies missing information, information that is outlier from norms (i.e. an insurance certificate is usually only 1 year, but the supplier entered 10), and information that can’t be confirmed (such as third party audits from organizations that can’t be found in government registries).

Find a solution that makes integration with supplier’s systems (MRP, CRM, order management, etc.) easy.

Suppliers need to quickly get POs out of your portal and into their order management, MRP, ERP, accounts receivable, etc. system for which your vendor will likely not have an out-of-the-box integration solution that you are able to implement on behalf of your supplier. So make sure the solution has a well-defined API that makes it easy for the supplier to integrate their systems if they want to and well defined file formats that will allow them to export orders, etc. from your system and import shipping notices, invoices, etc. from theirs.

Find a solution that includes cash forecasting capability for the supplier based on your early payment discounting schedule.

Face it. A supplier isn’t going to go for your early payment discount program just because you say it’s a good idea — they need to run their own numbers and realize that 2% is less than they are paying in interest, etc. Give them an easy to use calculator, especially since their Procurement or AR guys are likely NOT as financially adept as your financial modellers.

In other words, if you want a true supplier solution, find one that truly, truly, truly enables the supplier. Not just you.

You Need a Supplier Network – But Not For the Reasons The Vendor Says!

Every vendor with a supplier network touts their wares, and usually does so quite loudly. They go on and on and on (and on and on) about how their industry leading supplier network:

  • makes it easy to find new suppliers
  • makes it easy to search those suppliers catalogs
  • makes it easy to send out RFXs
  • makes it easy to place orders
  • makes it easy to collaborate with suppliers
  • … and so on and so on and so on (and so on and so on) …

Now, these are valuable benefits, but they are by no means unique to a supplier network. Taking ’em one by one (we’ll knock ’em all down as the satellite circus won’t leave town) …

  • you can find new suppliers from online marketplaces, industry associations, co-opetition, and from within your own organization (through better data management)
  • a number of online marketplaces make it easy to search catalogs, and there are a number of suites with integrated catalog management that work quite well, no network needed
  • just about every sourcing, procurement, and related application (suite) has RFX functionality
  • dozens upon dozens of procurement suites, e-commerce applications, etc. make order placement a snap
  • e-mail, online screen sharing, online workplaces, embedded messaging, and so on make collaboration easy

In other words, no supplier network is needed. So why do you need a supplier network?

Could it be for supplier management? Some of the more advanced vendors will submit that with a supplier network will help you:

  • detect supplier performance issues early
  • initiate and manage corrective actions
  • manage innovation management

And it will, but:

  • good metric and performance tracking and regular score-carding can detect issues early just as well
  • there are a number of best of breed corrective action management solutions out there, and many good sourcing suites have this functionality built in
  • and there are solutions for innovation management, and most SXM solutions, which do not necessarily have supplier network capability, have these …

So why do you need a network? And, to be more precise, an open supplier network?

Because supplier information management solutions, supposed to ease the burden of information management, don’t really ease it — they just transfer it to the supplier (who is supposed to log into the portal and maintain it). This sounds great, but given that a given supplier will have hundreds (or thousands) of customers, each with their own sourcing / procurement / SXM solution, instead of one customer having to maintain thousands of supplier profiles, each supplier has to maintain hundreds of their own profile instances for their customers.

In other words, you’ve just transferred costs through the supply chain, shifting your overhead into your suppliers who will, surprise, have to pass that cost onto you. But if you have an open supplier network, a supplier only has to maintain one profile, either in the network, or in the system of their choice that is capable of exporting and updating their profile in a standard (XML) format to the open network as needed. Instead of shifting information management through the chain, and the associated costs, you’ve minimized it, and eliminated the majority of the cost.

On the Fifth day of X-Mas (2016)

On the fifth day of X-Mas
my blogger gave to me:
some SRM Posts
some CLM Posts
some Best Practice Posts
some Trend Bashing Posts
and some ranting on stupidity …

Supplier Relationship Management. It’s another mouthful. And depending on your mindset, it either sounds like it is the consultant fad of the day or just drinks after work. But it is a critical part of Supply Management. Without good supplier relationships, you’re leaving money on the table. Lots of it. Not only does poor supplier performance cost you in terms of stock-outs, quality, returns, etc., but it costs you in opportunity. High performing suppliers are often the best source of innovation and value an organization has, and the organizations that are treated as customers of choice by those suppliers reap the biggest benefits. Thus, SRM is critical to master and to get right. So here are a few good posts to help you understand SRM and the current state of affairs.

It’s 2016! Welcome Back to the Industrial Age of SRM!

SRM Case Studies Speak for Themselves

Is Your SRM Program Leaving Hundreds of Millions on the Table?

Want an Exceptional Supply Management System? Do NOT Forget the Supplier!

Forget SIM. The Real Answer is SIR.

Just What Is A Next Generation Supplier Network

SIM? Is It Old News or a Shiny New Pair of Shoes?
Part I
Part II

The Most Important Word In Supplier Relationship Management Is Not What You Think It Is

Why You Need a Master Data Strategy to Properly Do Supplier Information Management

Why is Supplier Relationship Management (SRM) Under-delivering?

How Do You Identify a Stellar Supplier?

Of course there is much more to be said on the topic, but this gets you started. And searching the archives will keep you going.

Come back tomorrow for the sixth day of X-Mas.

SRM Case Studies Speak for Themselves

On Friday, we noted that State of Flux just released their eighth annual SRM survey, entitled Digital SRM: Supplier Relationships in the New Technology Landscape, and with it the surprising revelation that while leaders are taking steps forward, Procurement organizations as a whole might be stagnant or taking steps back! This, of course, is not a good thing because the best sourcing event in the world is useless if the plan (encapsulated in the contract) isn’t followed through and the expected savings or value never materializes. SRM is the key to realizing sourcing success, and too many companies overlook that (and wonder why 30% to 40% of identified savings never materialize).

We’ve written many posts over the years not only on the importance of SRM but how to implement it and support it with technology, so this time, instead of doing another multi-part series (which can be found in the archives), we’ll just skip to some of the case studies covered in the report and hope that maybe they are enough to convince you to get your SRM act in gear and go forward!

Telstra, a big name in Australian telecoms that is relatively unknown outside of Australia, implemented a SRM program that not only put more structure, process, and value around SRM but repositioned the perception of Procurement from a function that is only focussed on cost saving to one that works with suppliers and stakeholders toward the realization of business goals. As a result of this change in mind set, and more collaboration between different departments and suppliers, Telstra has met 10% of savings targets through increased revenues, showing that SRM can do more than save money, it can increase sales and revenues by finding ways to create new value that end customers will pay (more) for.

But that’s a small win compared to Ladbrokes who saved £18 M by taking the gamble out of SRM. Since beginning their SRM transformation in 2014, they hit a 3-year savings target of £ 18M a full year ahead of schedule, demonstrating the true savings potential of a well defined and well executed SRM project, which is huge in an industry where the majority of indirect spend has to go to a very small supplier base and where competitive bidding has little effect.

And the value of SRM has not been lost on the giants. For example, if Mars were a public company, it would be a Fortune 100 company as it regularly sells in excess of $ 33 Billion a year in food products (as it manufacturers more than just the iconic Mars bar). Even though it is a top procurement organization (that employs many leading supply management technologies and processes), it has recognized that SRM can help it get even bigger and better still, and that is part of the ambitious plan it has for SRM. While its initial SRM program is still in rollout, it’s starting to see a lot of enthusiasm from stakeholders and suppliers alike, which is a hard momentum to build in an organization of 77,000 employees with a dedicated commercial team of 1,200 individuals! Whereas most organizations might have a few dozen people on the commercial side, and maybe a few hundred, and can thus build enthusiasm for new initiatives and roll them out quickly, getting a thousand people on board is no easy feat. But the potential of SRM is such that even an entire organization can get behind an initiative that can cut costs, increase value, and even encourage innovation in the supply base.

In other words, there’s a lot of gold in them thar SRM hills, and any organization that doesn’t mine for it is leaving a lot of money and value on the table. To find out how much money and what kind of value might be left on the table, check out Digital SRM: Supplier Relationships in the New Technology Landscape. It’s worth your time.