There is no ONE platform!

As much as we would like to realize the dream of one platform for Supply Management, it’s not going to happen — at least not within our professional lifetime. The internet, and software development, might be moving in cat years, but let’s face it, it’s been 90 cat years since true first generation strategic sourcing, e-Procurement, and other fledgling Supply Management products hit the scene and we still don’t have a single end-to-end strategic source to pay platform! (Yes, there are source-to-pay platforms, and some are rather good, but there is not one that is not missing some key piece of functionality for strategic sourcing, such as optimization or advanced analytics, or for e-Procurement, such as e-Invoicing and automated m-way match.)

But what can we expect, with the exception of a handful of organizations (that can be counted on your fingers, minus your thumbs), we haven’t even reached the era of one ERP. Larry had a dream, but outside of Oracle, I believe the number of global organizations that successfully migrated their international operations to one global (Oracle) ERP instance is 5 (and that’s why the vision of one platform went away and Oracle acquired so many other leading ERP platforms, leaving only its rival SAP standing at the end of the day once the acquisitions on both side are tallied up.)

We have the situation that no one vendor, and this includes SAP, Oracle, and IBM even after their string of acquisitions over the last 90 cat years, has a platform that fully addresses basic Sourcing, Procurement, and Logistics, and once you start factoring in CLM, SRM, Sustainability, Talent Management, and Innovation Management needs, nothing comes close, or will come close, for at least another 60 cat years at the current development pace. In addition, with the constant pace of innovation in terms of process, and the constant shift both towards globalization and specialization, nothing may ever come close.

Sauron may have forged the one ring, but not even the almighty Google will forge the one platform. So you have to stop focussing on finding the right vendor and shift to finding the right platforms to serve your Supply Management needs. To do this, you have to first ask, what is the workflow?

Even though the organization may have different processes and procedures for T&E, P-Card, indirect, and direct purchases, depending on category, department, amount, and budget owner, there is still one (mega) process that is followed.

There will be a needs identification followed by an identification of whether or not an inventory, contract or preferred vendor exists to fill that needed followed by a determination of whether an event is needed or not, followed by the determination if a requisition is needed, followed by an order (which may or may not require a purchase order) followed by goods delivery and an invoice, followed by acknowledgement and inventory, followed by determination of an approval process, followed by an approval process for the invoice, followed by a payment, followed by data capture and archival in the right systems. There is a mega-flowchart that defines the mega-workflow that is defined by everything the organization needs to directly and indirectly support the process that defines system needs and integration needs.

The answer is to identify one or more minimal set of overlapping platforms that fulfill the workflow needs, integrate with the underlying ERP and / or (Master) Data Management (MDM) systems, and, directly or indirectly (through the underlying systems) integrate with each other. Once these system sets are identified, one works with the vendors that best meet the organization’s overall needs and implement the systems that accomplish the workflow. That’s how progress is made. Nothing is gained by seeking out the one platform. It is a myth, and a myth that destroys organizational progress and productivity.

Influential Damnation 95: Competitors

Conferences are annoying, Consortiums are frustrating, but Competitors are outright damning as they are there, in your face, day in and day out. Your company makes an announcement. They try to one up the announcement. Your sales team gets in front of a customer. They weasel their way in. Your engineers get a great idea. They try to steal it. Your scientists make a big breakthrough. Here comes the corporate espionage! And so on.

But that’s just the tip of the iceberg. Procurement has its own set of problems to deal with. These include:

They compete for limited supply and drive prices up.

Markets are all about supply and demand. Sometimes supply is based on demand, as more demand leads to more supply, but sometimes supply is based on raw maw material availability. Raw materials are often in limited supply due to the amount that can be mined, harvested, or processed. And if your competitors need these raw materials as badly as you, and there is not enough to around, either your prices are going up or you’re the organization not getting your demand met.

They compete for limited talent and drive prices up.

Procurement professionals need to be jack-of-all-trades and masters-of-one. These individuals are very few and far between and your competitors will want them just as bad as you. So, not only will you have to vie for their attention, but you will have to offer the salary, training, international experience, socially responsible, and very attractive opportunities the best candidates are looking for, and one way or another, that’s going to cost you top dollar.

They compete for limited expert (technology) resource time.

Let’s face it. You’re never going to be able to find and hire enough talent in-house to tackle all of your Procurement project needs, which will include complex sourcing, strategic procurement, non-complex/non-strategic sourcing, contract (lifecycle) management, supplier (relationship) management, performance analytics, technology implementation, and data feed integration, and you will need third parties to assist you. However, due to ever increasing requirements for supply management success, and the ever increasing sophistication of platforms and processes needed to manage your constantly evolving global supply chains, you will not only need the best vendor partners, but the best talent at those partners, which is a relatively small percentage of the overall workforce. Your competitors will be vying for this talent too, and some will be making bigger (and in the eyes of the vendor) better offers for the time of these expert resources, which could leave you up the creek without a paddle.

While your organization might need competitors to justify its market, when it comes to Procurement, sometimes that’s the last thing the organization needs. That’s why Competitors are another perpetual damnation.

Why Your First Generation Sourcing Platform Is Not Ready For Modern Sourcing

First generation sourcing platforms, circa 2005, were a miracle cure for the average Sourcing organization that was drowning in data and demands to save, save, save without enough time or resources to tackle even a fraction of the categories that needed to be under management.

First generation Spend Analysis systems helped the Sourcing team identify the largest spend categories and the largest organizational suppliers, which were prime candidates for the first strategic sourcing evens put through the new sourcing platform.

First generation RFX systems helped the Sourcing team capture more data from more suppliers than ever before and not only better qualify potential suppliers but collect more detailed bid breakdowns for analysis.

First generation e-Auction systems helped the Sourcing team put non-strategic high-dollar categories with very little complexity out to bid for quick savings success.

And, most importantly, first generation decision optimization systems allowed the sourcing team to build realistic cost models, capture constraints, and devise realistic award scenarios that identified real savings.

Many organizations that acquired these suites and applied them successfully saw year-after-year returns of 10%+ on the spend brought under management. And a few are even seeing some savings today, but just like the second auction saw little savings and the third auction saw a price increase, the year-over-year return is dropping. Why? Because while these first generation platforms were infinitely more powerful than anything that had come before, they weren’t designed to capture the full extent of complexity in an average category — complexity that has been considerably increased since the early days of sourcing due to increased outsourcing, increased globalization, increased regulation, and a constantly evolving global marketplace.

The following staples of first generation sourcing platforms just don’t cut it anymore.

  • Limited Form-Based Data Collection
    that don’t allow the full breadth of responses a supplier could provide to be captured
  • Built-in Static Reports (with limited 2-D graphing options)
    that don’t evolve as organizational needs evolve
  • Single User Sourcing Events
    that don’t take into account that complex categories require entire teams
  • Limited Approximations
    that force high order cost approximations and don’t capture true cost definitions
  • Fixed Workflows and No Templates
    that don’t adapt to organizational needs

If you want to know what is needed in a sourcing platform to handle the full extent of the complexity in today’s categories, download Sourcing Innovation’s recent paper on Complex Sourcing: Are You Ready, sponsored by Trade Extensions, and find out once for all why optimization is the plan and not just something reserved for a handful of strategic events.

Freightos: Flippin’ Freight Quotes Faster than a Fleet-Footed Feline on Guarana

A couple of years ago we introduced you to Freightos in our post on how they were helping to bring freight into the modern era. Even today, when we are over half-way through the teens, many Procurement professionals, when they call up a forwarder for a spot quote, still have to wait two or three (or even eight) days for a response. It’s absurd. (See this hilarious video on The Great Freight Experiment.) And when the buyer has to get a shipment from Shanghai to San Francisco, which requires a truck, ocean freight, and another truck or a truck, air freight, and another truck, it’s a nightmare waiting for all the quotes to come in.

Freightos was founded to deal with this problem. In order to address this problem and speed up the freight quote time, on or off contract, in the global market place, Freightos was built as a technology platform that enables an on-line network of global freight forwarders to provide instant spot-rate and on-contract quotes for point-to-point global shipments when a (potential) customer needs them.

When a forwarder, or freight-forwarder / 3PL, signed up for the Freightos network, and uploaded their standard buy and sell rate tables for ocean, air, and land-based shipping for all of the routes they serviced, customers could access the forwarder’s portal on the Freight OS network and get almost instantaneous quotes for the route(s) of their choice. All the buyer had to do was specify the origin, the destination, some basic load characteristics, the desired pick-up date, the allowable modes, whether or not the load is hazardous, if insurance is required, if a customers brokerage is used, whether or not nearby ports / airports can be used, and click quote. Within seconds, the buyer could get the quickest delivery quote, the cheapest quote, and some alternate options from any forwarder that had a rate table in the system and chose to make it public. They could also request custom quotes from a forwarder as well, which they might want to do if they were willing to commit to a certain volume over a certain period of time.

Since it’s launch, Freightos, which primarily targeted freight forwarders and 3PLs, has been extending its platform and its target audience, now also serving (and targeting) enterprise shippers (in traditional logistics divisions) and e-commerce shippers as well. Since it’s initial launch, Freightos has added two major features:

  • the marketplace
    where all forwarders can list their public rates and any buyer can easily search public quotes (without a forwarder having to share quotes with them), compare, and book quotes
  • contract management
    which permits a buying organization to upload all of their contracts, which are included in search results, if the route is covered, and allow a buyer to see their contracted rate vs. the market rates

As well as a few other valuable features for enterprise shippers that include:

  • tariff management
    that allows freight providers (including 3PLs and forwarders) to define all of the associated tariffs and buyers to include all the tariffs defined by their contracted routes
  • spend visibility
    that allows enterprise shippers to see how much is being spent by lane, forwarder, region
  • business intelligence
    that allows enterprise shippers to slice and dice the spend visibility and contract data
  • real-time multi-currency support
  • powerful filtering
    that allows an enterprise shipper to include or exclude forwarders, forwarders, transport modes (and specify ocean only or air only), select and deselect nearby ports, etc.

Freightos is a very powerful solution that will soon be Procurement’s best friend. How so? Stay tuned, as Freightos will be launching their Procurement portal early next year which will build on the powerful enterprise shipping portal they have now, but with features and functions targeted to make your life as a Procurement professional much easier when you are trying to build those total cost of ownership models during your multi quarter and multi-year sourcing events.