One Hundred and Forty Nine Years Ago Today …

An American Legend was born when Jesse James commits his first *confirmed* bank robbery.

What does this have to do with Procurement? Besides the fact that, when you think about it, many suppliers will rob you blind on a daily basis if you are unprepared during the negotiation, during the invoice review, or during the warranty process.

Well, if you think about it, sometimes if you want to get famous, you have to take big risks.

But, more importantly, if you take risks, you can get famous … but in the case of Procurement, you don’t have to rob a bank to make money. You just have to get smart about how you buy. There are savings to be had in every category, and all you have to do is find them to bring millions to the bottom line.  And take the risk of doing something new.

And all you need to do to figure out how is to read the archives, strategy, process, and the tools you need to make it all happen.

Are You Sick of the “Digital Transformation”?

the doctor is certainly sick of the terminology. Not a day goes by that some backwoods yahoo doesn’t think this makes the perfect headline, twenty years after we were introduced to specialized Procurement tools, almost thirty years after the introduction of the ERP, and more than forty years since specialized MRP systems were introduced to the market. The “digital transformation” is now new and hasn’t been since the internet evolved to the world wide web and every software company started transitioning to the cloud (which, by the way, is just someone else’s computer!).

the doctor is also sick of all the article stating that the digital transformation will not displace (real) Procurement professionals because that’s obvious. Besides the fact that we are nowhere close to real AI systems, most of Procurement today is not number crunching. It’s fire-fights. Stakeholder-pleasing. Countering disruption blights. Supplier appeasing. It’s a lot of relationship management, which is something a piece of software just can’t do. (There are a few good SRM platforms that enable SRM, but they do not accomplish SRM — that is accomplished by the expert relationship managers that astutely use the system.)

the doctor is also sick of the futurists who are stuck in the past and still predicting a great digital renaissance to come. Our collective IQ has dropped since the renaissance started; Twitter is making us dumber than goldfish (and you wonder why the doctor despises Twitter); the more we trust the machine, the more blind we become to the risks involved; it’s creating an unparalleled digital divide worse than anything William Gibson and his Neuromancer mind can come up with; and Ready, Player One might be the best possible future if we continue down the current road (assuming a certain dictator-want-to-be doesn’t start World War III first).

For better or for worse (and its for worse if we don’t stabilize our power grids and shield the hard drives that contain all of the data that drives our economy, as a natural EMP could wipe out economies in a second), we’re going to keep moving down the digital highway at ever increasing speeds, which means pending something drastic, the next twenty years are going to the be the same as the last twenty and all this hullaballoo about digital transformation, at this point, is just unnecessary noise.

Top Nine Posts of 2018 … From Years Gone By

As per yesterday’s post where we highlighted the top 10 posts from 2018, of which five were on GDPR, the top 9 visited posts of the year were actually from year’s gone by. Today we are going to look at those, and even speculate as to why.

  • 9. The Purpose of a Contract is Easy to Define Is it because people, for reasons that perplex the doctor , struggle with contracts? Is it because Lawyers have done a great job pulling a fast one over the majority of the population and convinced them contracts are difficult and must be worded in complex Legalese? Is it because no one believes that contracts are relatively easy to create and can be written in plain English. It’s all about defining what both sides want, what happens when things go wrong, who’s responsible, and how you get out. It’s predicting all the scenarios and accounting for them up front. In plain English.
  • 8. Common Challenges of Indirect Procurement Most people in indirect Procurement know these, but it’s always nice to be sure, right? Direct wants to know that the other side of the wall has similar problems? The reason for this post’s popularity is a conundrum.
  • 7. A Strategic Sourcing Plan Outline This is probably the most direct, to the point, article out there on what should be in a basic strategic sourcing plan, with a hat-tip to Robi Bendorf of Bendorf & Associates .
  • 6. The Evolution of Purchasing
    Who doesn’t like a good history lesson? Especially when it’s one of the few guest posts in SI’s history on the subject (from Lisa Nyce).
  • 5. Is There a Difference Between Strategic Category Sourcing and Strategic Category Management
    This is a confusing question, to this day. Both terms are interchanged, used, and misused on a regular basis. No surprises a lot of readers would be looking for some clarification.
  • 4. I Will Survive
    Wow! the doctor knows you like his lyrical humour — he often gets more “fan mail” on these pieces then deep expositions (which he knows you read to cure your insomnia), but how did an ode to vendors who need to be forgotten become the fourth most visited post of the year? At least one inquiring (but not Enquiring, Americans will get this) mind wants to know!
  • 3. RFX Defined This is obviously the de-facto definition of RFX on the entire World Wide Web.
    This is a top post year after year after year. Webster’s should just point to SI. Seriously. the doctor would be a top ten NYT best-selling author if everyone who read this post bought a book!
  • 2. Five Types of Supply Risk and How To Mitigate Them This is probably SI’s top-visited post of all times. Normally 10X the traction of a top 10 post after the top 3 posts of the year are discounted. Can no other source define supply risks so succinctly? the doctor wants to know! The secret sauce in this post is worth a fortune!
  • 1. Its My Blog This post is obviously mistaken for the about post. SI’s rant anthem is pretty damn good, but #1 good?

Top Posts of 2018 To Date … A Breakdown

Stats are not something the doctor obsesses about. This is the second oldest continuously running niche blog in the space, and if you broke Spend Matters into its constituent blogs and measured them individual, there are many weeks this blog would get more hits.

And while the statistics have not been interesting to the doctor since SI reached #1 on all the ranking engines many years ago (when Spend Matters was just one blog and not a family) and stayed neck and neck for a while, it is interesting to the doctor to see what people are reading (and figure out why).

It’s also interesting to see if any posts of they year make the top 10 visited posts of the year. One thing about taking an educational and informative focus is that posts on this blog stand the test of time. The most visited educational post of the year is actually from 2007! In fact, only one of the top ten visited posts this year is from this year. (But that’s a subject for our next post.)

The most visited post of 2018 was a GDPR post and, in fact, five of the ten most visited posts of 2018 were on GDPR back when it was coming into focus. It seems no one was really ready for the new EU data tax and were scrambling to figure out how to comply. (And it is a data tax. If you don’t keep someone’s private data private or can’t expunge it to the extent legally required when asked, you get a big fine. But if the government exposes millions of records in a data breach, nothing happens. Companies, and even individuals, can get penalized while governments can continue to keep poor privacy standards to no ill effect. Sounds like a tax to me!)

The other five posts were:

  1. Maybe You Can Be a Procurement Hero
    Let’s face it, it sucks being stuck in the dungeon of the The Tower of Spend day in and day out. It sucks that sales and marketing get all the glory when every dollar you save is ten times as impactful as every dollar they bring in. It sucks that the C-Suite is telling you to cut 10% across the board on already lean categories while they still fly business class, have no restrictions on meal spend, and upgrade their perfectly functioning laptop and phone every year while you have to wait three. Of course you want to be a Procurement hero!
  2. One Hundred and Fourteen Years Ago
    This was a surprise! A short post on the construction of the Panama Canal, an important development in the history of Ocean freight (as it cut two to three weeks and 7,872 miles off of Atlantic-to-Pacific (and vice versa) voyages.
  3. Ariba Live Europe Needs a Mascot
    This was also a surprise! Of course Ariba is still a significant player and of course news from Live is always sought after. But a mascot recommendation? Maybe the doctor is right and smart, talented, sexy Procurement people do prefer cats to dogs!
  4. Is TCO a No Go Without Optimization
    This is a bit of an odd-ball for a top 10 post. The holy grail for most Procurement professionals is TCO — Total Cost of Ownership — minimization (so of course the topic is popular), but many Procurement professionals still feel they do not need, and sometimes even fear, strategic sourcing decision optimization, because it is heavy math and early solutions were extremely difficult to use (and, despite the doctor‘s insistence since the beginning of this blog that you need it, it is often avoided. But new solutions hide the math, walk the user through scenario (and constraint) construction, and are often easier to use than first (and even second) generation e-RFX solutions which, as pointed out last week, are often (still) kicking you when you are down (Part I and Part II).
  5. Of Course Catalogs Cant Be Trusted to This was about the only no surprise. Catalogs are a staple. Low value spend is a pervasive problem. And the doctor‘s rants are his most popular posts.

Come back tomorrow to find out the nine most visited posts of the year which, as per above, were not actually published this year! Proving that, unlike blogs that focus on news (or, in some cases, speculation and rumours) of the day, blogs that focus on education and explanation really do stand the test of internet time. Even if they maintain an old-school look! (Because, sometimes in unglamorous Procurement, we’re lucky to have old school tech. Unlike modern tech, it always works! And being the world’s second oldest profession, we know how to make old-school work!)

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.