Realizing Those Savings Is No Easy Feat

Especially when it requires achieving the perfect order.

So how can you maximize the chance of a perfect order, which, by definition, is acquired at just the right cost (which, technically means there are no savings to be had beyond what you negotiated when you signed the contract).

As per this post, for savings to materialize, the following necessary (but not sufficient) conditions have to be met:

  • the order has to be placed with the contracted supplier
  • with sufficient lead time
  • and then shipped by the supplier on-time
  • using the approved carrier and shipping arrangement
  • with the required third party and government fees promptly paid
  • and paperwork promptly filed
  • so there are no delays and the product arrives at the warehouse on time
  • where it is properly received, inventoried, and shelved
  • and then the invoice is verified against the good received and the PO
  • and paid at the right time when everything is okay.

This is a tall task, taller than accepting the tall tale of Jonah and the whale, but not an impossible one, and no miracles are required to make it so. Just the acquisition of the right technology, implemented in the right framework, supporting the right processes, and tailored to support your organizational talent. It will take some terrific transition management to get the right organizational alignment, but such alignment is possible, and the leaders are getting closer — especially now that we are beginning to realize Procurement 3.0.

So where do you start? Acquire the core technologies you need to streamline your supply management practices.

  • a CLM solution to manage your contracts
  • an e-Procurement solution that only allows orders for products on contracts from approved suppliers
  • a demand planning solution (which may be part of a next-generation ERP solution) that integrates with your e-Procurement solution and notifies you when order deadlines are approaching and automatically submits auto-fill orders
  • a 3PL solution that tracks shipments in real-time
  • a Trade Management solution that automatically generates the required paperwork, computes the required fees, and manages, tracks, and confirms their submission
  • an Inventory and Warehouse Management System that integrates with the e-Procurement Solution that manages receipt, shelving, and distribution
  • an e-Procurement solution that also does invoice management and m-way matching
  • an e-Payment solution that integrates with the e-Procurement solution and includes Supply Chain Finance Capabilities (including dynamic discounting, supplier financing, and pre-shipment finance, for example) to help the company determine the best payment time

It’s just the beginnings, but it’s a good start.

Some Additional Screen Questions for Services Suppliers

Is Your Insurance Up To Date And Can We Have a Copy of Your Policy?

Let’s face it, it’s important that you are protected. Especially if you are hiring service people that will be performing tasks that have health and safety consequences such as window washing (they fall off the bucket-pulley), installing power lines (they fry themselves or people around them), or transporting hazardous waste (which doesn’t give people super powers, but can give them acid burns or deadly radiation poisoning). You don’t want lawsuits against you for a responsibility your service provider takes.

How many people do you have with the skill sets we require? How many need to have their certifications renewed in the next 12, 24, or 36 months? How many are within 4 hours of our location?

If you need 5 contracts with a given skill set and certification to do the job, and they only have 5, and those resources are also required by their other (higher-paying) clients, what is going to happen to your timelines? They are going to be shattered.

Moreover, if the certifications need to be renewed pn a regular basis, the last thing you want is a resource that is going to be grounded in 6 months to go take a training course if that’s a critical time in your project timeline.

And if you need a guaranteed response time by a certified professional within a few hours, if the closest resource is a 4 hour plane flight away, that’s not a good situation to be in.

How many claims have been made against you in the past year? And how does it break down in terms of safety vs performance/contractual guarantees?

Face it, if the provider is large enough, something is bound to have gone wrong according to Murphy’s law, or someone is bound to have made a claim, founded or not. And even if the provider is stellar, you need to know this as claims, and lawsuits, can take up their time and resources and put a strain on them that could carry to your projects if not known or managed.

Furthermore, safety issues are paramount so if the provider doesn’t have a good track record, you will need to think twice.

What is your on-time delivery rate for projects of the type we are requesting? When you are late, what is the typical root cause?

If you get this far down the list, then the next thing is to understand when something has went wrong, why. This can allow you to devise communication and monitoring plans to possible prevent disruptions or delays through early warning and better project and service people management.

What is your approach to joint project management? They’re your people, but they need to be meeting our project timelines?

If the service people are being hired to support a long-term critical project, and lack of the right people at the right time could jeopardize that project, then you need to now you have a service provider tha twill work with you to make sure you have the right people at the right time to meet your goals.

Some Screening Questions to ask Prospective Strategic Suppliers

Before you select a strategic supplier, no matter how good their RFI looks, be sure to ask them some point blank questions that are critical to your business and judge the answers they give you (as well as their openness and directness in giving you these answers). Remember, you’re depending on them to serve your strategic customers so you need to be sure they can get it right.

Can we have a copy of your Code of Ethics, CSR Practices, and Privacy Policies?

If the vendor doesn’t have any of these, or won’t give it to you, sound all the sirens and run for the hills. No organization can afford a publicity disaster these days, and a supplier without good ethics (that it is willing to follow), good social responsibility (that it is willing to enforce), and good privacy (that enable it to comply with legislation like GDPR) is YOUR publicity disaster waiting to happen — and we all know what that does to your brand value!

Can you provide 3rd party proof that you live up to it?

It’s one thing to say you have an ethics/CSR/privacy policy, it’s another to follow it — and another yet to have true third party proof that you do. Make sure the vendor has certified CSR and Privacy ratings from trusted, true, third parties (and not from a small consortium of vendors that fund the certification agency) and can point to at least one situation where it terminated a business relationship with a client or supplier that was unwilling to operate in an acceptable, ethical, fashion.

Can we have a copy of your Quality Assurance Process?

If the vendor doesn’t have one, or won’t give it to you, then you need to ask yourself what kind of quality you can expect. (The answer is obvious: low!) Note that you may need a document for each distinct type of product you purchase.

What certifications do you have with regards to your Quality Assurance Process? ISO? ASQ? etc.

If the vendor doesn’t have any certifications, how much faith can you put into the process the vendor is using?

Can you provide references from current AND former clients who did business with you for at least 2 years?

Just like your customers ask you for references, if this supplier is going to be strategic, you need its references. And remember that you don’t want references who have been with the vendor less than a year because the blush is still on the rose and they will be full of peace and love for the vendor. You need a real review from an experienced customer who can tell you what’s good and not so good. No vendor is perfect, and if the not so good is not relevant to your business, then their imperfection is irrelevant. Plus, if customers’ left, why? Was it due to a change in business? Or poor performance? If the customer left for due to a change in business, and they still have a good reference for the former supplier, then that speaks volumes. If the customer left due to continuously poor performance, that also speaks volumes.

What is your dispute resolution process?

Face it, at some point, something is going to go wrong. Sh!t happens. How do they deal with it? And is it a process that you can deal with?

Do you understand our business? Explain!

If the supplier has never supplied a customer in your vertical, and you have special needs, this could be an issue. It could also be an issue if they have never supplied a customer with special needs in your vertical or you have considerably different requirements than the average company in your vertical. Make sure the vendor has a good understanding of who you are as a company by asking this open ended question.

Who are your top competitors? Why are you better for us?

Everyone has competitors. If they don’t, then they are misguided or selling a product or service no one needs. There are no Blue Oceans any more, just open oceans that are only sparsely sailed (by a few companies who are eager explorers). Make sure they give you a few real competitors as well as a good reason as to why they are better, as this will serve to not only enforce their answer to the previous question (and let you know if they really understand your business) but let you know that they have attempted to be honest in their assessment.

Is this everything you need to ask to make sure the supplier can be a strategic partner? No. But it’s a good start!

What Elements Should You be Looking for In a Platform? Part II

That’s a very hard question and, to some extent the key elements will, at least in many views, revolve around what you are looking for the platform to support, but there are some elements that should be part of your S2P platform regardless of where your solution focus is.

What are they? Where can you find some hints? For starters, you can loo to the new version of Solution Maps, designed by the doctor, with initial results releasing in less than two months, which have refactored all of the maps to have a new Common *platform* section (as well as a new common section for Sourcing – SXM due to the large overlap between the requirements and today’s platforms) which focuses on areas that are critical to S2P success regardless of your focus.

This new Common section is broken down into five categories

Analytics
Configurability
Supplier Portal
Foundational SXM
Technology

And they key requirements for any platform can be found in these four categories

Analytics
Technology
Configurability
Supplier Portal

In our last post we analyzed analytics and technology. In today’s post we are going to look at configurability and the supplier portal, both of which are also vital to ANY S2P application, whether best of breed, mini suite, suite, or next generation platform.

Let’s start with configurability. It has five critical sub-categories:

Globalization

Sourcing is done over global supply chains so global support for languages, currencies, data exchange, and data protection is absolutely vital.

Organizational Modelling

The application needs to support accurate organizational modelling to allow for selection of proper delivery addresses, identification of appropriate personnel associated with a location, identification of the right accounting structures (for the local country), etc.

Personalization

When it comes to usability, there is no one size fits all view. The CPO needs to see summaries and critical issues when she logs in, the category buyer needs to see a snapshot of current category performance, current projects, related issues, and so on. The CFO only cares about the financial summaries and impacts. And so on. And no one wants to click around for 5 minutes to find the information they need – they want it in their face when they log in. A good measure of a modern application is not how long the user is in it, but how long they aren’t in it. From a user’s viewpoint, as Weird Al so eloquently put it two decades ago, “it does all my work without my even askin’”.

Project Management

These days, users don’t have tasks to do, they have projects to manage. RPA was built to do mindless, repetitive tasks. And that’s what the system should do, guiding the buyer through the project to allow her to focus on the strategic decisions and relationships.

Workflow

A modern S2P application needs some workflow support that allows it to adjust to the needs of the user and the senior administrators to pre-define common workflows to optimize user productivity.

Similarly, every application that collects or stores supplier data needs to provide great capabilities around

Document Management

Business is captured in documents of all shapes, sizes, and types … and these come from both parties, not just the buyer – it must be easy for the supplier to get and put these with ease

Profile Management

A supplier must be able to maintain, or at least easily submit updates and corrections to, their profile. The whole point of a portal is to enable the supplier and ease life on the buyer.

And, of course, as we dive into each of the main areas of S2P, there are other core features, but these foundational elements need to be addressed before any vendor can offer a great best-of-breed point based solution, mini-suite, suite, or platform.

What Elements Should You Be Looking For in a Platform (Part I)

That’s a very hard question and, to some extent the key elements will, at least in many views, revolve around what you are looking for the platform to support, but there are some elements that should be part of your S2P platform regardless of where your solution focus is.

What are they?  Where can you find some hints?  For starters, you can loo to the new version of Solution Maps, designed by the doctor, with initial results releasing in less than two months, which have refactored all of the maps to have a new Common platform section (as well as a new common section for Sourcing – SXM due to the large overlap between the requirements and today’s platforms) which focuses on areas that are critical to S2P success regardless of your focus. 

This new Common section is broken down into five categories

Analytics
Configurability
Supplier Portal
Foundational SXM
Technology

And they key requirements for any platform can be found in these four categories

Analytics
Technology
Configurability
Supplier Portal

Let’s start with analytics.  This has four sub-categories, all of which are vital:

Data Schema

  As today’s information economy runs on data.  Big data.

Data Management

  As this data is constantly expanding and changing.

Metric Management

  As you can’t manage what you can’t measure

Reporting

  As we need to extract the data we need to do our jobs.

Now let’s look at technology.  Each of the seven sub-categories it contains are vital:

Data Management Support

  Which looks at foundational technology requirements to handle the data needs of today and tomorrow

Document Management Support

  Which looks at the additional technology required for document management (as the business world runs on documents and contracts)

Core Platform 

  Which looks at the architecture and software stack designed to support an evolving system

Automation

  As efficiency is about automation, usually accomplished by RPA and, in some cases, assisted intelligence (the first level of AI, which is where most companies are)

Standards and Integration

  As one platform can’t do it all.  Just like the internet does not support the One Ping. 

Emerging Technology Support

  As platforms must keep up

UX Layer

  As the platform must be usable. By the average user, not just the PhD with years of esoteric knowledge. 

Tomorrow we’ll outline the other categories and then in future posts we’ll dive into some of these key areas and define what they might mean in plain English. 

Stay tuned.