One Hundred and Fifteen Years Ago Today

The first Nobel Prizes were awarded. The will of Swedish inventor Alfred Nobel, whose last will specified that his fortune be used to create a series of to recognize those who made discoveries that brought “the greatest benefit on mankind”, the first prizes were awarded in Chemistry, Literature, Peace, Physics, and Physiology or Medicine in 1901. Shortly after his death, the Nobel Foundation was established to manage the finances and administration of the prizes and shortly after the first prizes were awarded.

And 115 years later, the prizes that are widely regarded as the most prestigious award available in the fields of literature, medicine, physics, chemistry, peace, and economics, are still being awarded and the benefits yet to be found are still blowin’ in the wind.

What do you think LOLCat?

LOLCat and SI congratulate Bob Dylan. After all, we’re still only bleeding.


Disillusioned words like bullets bark
As human gods aim for their marks,
Make everything from toy guns that spark
To flesh-colored Christs that glow in the dark,
It’s easy to see without looking too far
That not much is really sacred.

While preachers preach of evil fates
Teachers teach that knowledge waits,
Can lead to hundred-dollar plates.
Goodness hides behind its gates,
But even the president of the United States
Sometimes must have to stand naked.

It’s Alright, Ma (I’m Only Bleeding), Bob Dylan, 1965

What’s the Future of Just In Time for Consumer?

It’s the holiday season, which means retail is in overdrive. This means on-line retail is in overdrive, and this means shipping is in overdrive.

Shipping which relies on postal services or private carriers. Postal services which are in dire straits and which are getting costlier by the year and private carriers which are also getting costlier. The USPS recently announced yet another round of price increases for 2017, just six months after it raised prices almost 10% (which followed price increases barely six months before).

Costs just keep increasing, and it’s hurting small retailers who can’t negotiate Amazon and eBay bulk shipping rates (and offer free shipping @ 35 or low cost shipping on individual orders). People aren’t going to pay a $20 shipping fee to ship a $10 product. And they’re not going to buy from retailers where this is the case.

So, we’re entering the age where the Amazons and their ilk are going to do in the online world what the Walmarts and their ilk did in the offline world — kill the little guy unless the little guy falls in line. Prepare to see even more Amazon and e-Bay storefronts popping, piggy-backing off the already in place infrastructure in exchange for a small piece of the profit. And prepare to see the closure of even more independent storefronts that wanted to compete without having to give a cut to the new digital mafia, as they just won’t be able to compete.

This means that sales will centralize, but shipping rates won’t necessarily standardize. The Amazon resellers also use the Amazon warehouses will be able to take advantage of the lowest shipping rates, and the rest, like the e-Bay storefronts, will be subject to reduced rates, but not the Amazon warehouse rates. And these rates will keep increasing as fuel goes up, labour goes up, and the carrier rates go up even more. Stores were invented for a reason — it’s much more cost effective to ship a pallet to one location than 100 items to 100 locations. Even with route optimization, right turns only, last-leg optimization with the local post, and so on — package delivery costs can only go so low. As long as a human is involved.

This says that the future of just in time for the average, cash-strapped consumer, is likely one of two futures. The past where physical stores regain their supremacy. Or the pre-SkyNet future where drones rule the skies.

However, the best future for just in time consumer delivery might be one where the old mail order model is modernized for the e-Commerce world. Back in the day, if you were in a rural community or small town, and you wanted something from a big box store (like Sears) you’d go to a local mail-order outlet where you would hand over some money (which could just be a deposit or the entire amount) to order something from a catalogue. Then, a few weeks later, you’d go back to pick it up. Amazon has revived this with the Amazon locker where you can get faster delivery and pick up by agreeing to pick up at a nearby locker, which is essentially a digitized bus locker system where you scan a code which opens a locker with your package.

The best future is one where a third party opens a lock location that can be rented by any online merchant that wants to use a locker for delivery where carriers offer lower rates to ship to the locker location. It would require at least USPS to agree to offer lower rates to ship to a locker location, which would require a large number of locker locations for the locker owner to negotiate better rates. This means that, in the short term, for this concept to take off, Amazon will have to go heavy into it, offer not only faster shipping but significantly lower shipping rates to get them to take off, and then offer these rates to their resellers at cost, or a loss, to get everyone using them. But it would then be able to capitalize on yet another revenue stream, as it could allow third party non-Amazon storefronts to ship to these locations for a small fee, and get an even bigger footprint in the physical world — which would allow it to create Amazon stores with “best sellers”, the same way Apple was able to create Apple Stores.

In summary, the future of just in time for consumer is still a bit cloudy, but it should be a hybrid locker / storefront model where costs can stay down, but customer satisfaction can stay high. Thoughts?

For Most Organizations, Ain’t Nothing Wrong With Being White & Nerdy …

In a recent post over on Procurement World, the procurement dynamo asks if the Kraljic Matrix [is] Actually Becoming Obsolete? He notes that since Kraljic published his classic article 33 years ago, world trade has quadrupled, globalization has exploded, and Procurement is operating in a much faster, bolder, world than it was in 1983.
In this brave new world, Procurement has to manage ethical supply chains and practice good Corporate Social Responsibility, or its CPO could be personally convicted of criminal charges and end up behind bars. (While this is a great place for many sociopathic CEOs, it’s not where ethical and hard working CPOs deserve to be.)

the procurement dynamo notes that, in some ways, the Kraljic matrix still works well. The heart of the Kraljic matrix, segmentation into manageable buckets that can be addressed with consistent strategies, is still valid, but the degree of segmentation needs to be much deeper now than it used to be. However, even the concept of a 3-d Rubik’s cube doesn’t quite capture the level of segmentation required in today’s supply chain.

It used to be supply risk and financial risk was enough. Now there is information risk, sustainability risk, compliance risk, ethical risk. That’s significantly more than a cube can handle. (We’re at a six-dimensional hypercube, and we’re just starting.) That’s why we have to adopt Value Based Sourcing and replace TCO (Total Cost of Ownership) with TVM (Total Value Management), which is the root of all value models.

This is challenging, as the procurement dynamo points out, but not impossible, especially for the White & Nerdy. It doesn’t matter if they look like they are still in the 80’s, insist on riding segways down the hall, or shout blasphemies in Klingon while trying to solve the problem. As long as the problems get solved, which only the IQ and TQ-savvy white & nerdy can do, that’s the way forward.

ScoutRFP – Spreading their Silicon Sunlight from the Western Shore

When we last covered ScoutRFP back in 2014, they were hoping to help laggard Procurement organizations leave the dark ages (Part I and Part II) and enter the modern age. Launching with nothing more than an easy RFP solution (which was a 15 year old solution at the time), ScoutRFP has taken off like a rocket in those organizations that needed an easy, lightweight, solution for everyday events with a price tag they could afford.

The RFP solution was, and still is, 100% SaaS and designed to work with minimal inputs. It guided the user through a minimal workflow to create the RFX, select the suppliers, evaluate the responses, and make a decision. It was very flexible, allowing the user to create the RFX to the level of detail they wanted, or keep it high level (and cut and paste the instructions and questions from Word). And it gave the organization visibility into, and some control of, spend. The CPO could define a hierarchy and see what everyone was doing, the directors could see what their teams were doing, and the buyers would see their events — and all the reports could roll up as well. It was simple, but it hit the suite spot of low complexity and low price for organizations trying to crawl out of the unlit Procurement dungeons.

It was such a hit that, based on this capability and reception alone, ScoutRFP was able to secure $2.75M of funding in 2015 (from NEA, Zapis Capital, and Google Ventures) to extend the platform and raise an additional $9M of funding this summer in a series A funding round. And move west (to San Francisco).

Since then, ScoutRFP has added basic e-Auction capability, project management and savings tracking, Supplier Information Management, and an improved Supplier Portal.

The platform now has the ability to track all requested, current, and upcoming sourcing events and their associated status; categorize the events using any desired organizational categorization scheme; quickly initiate new events (RFX or Auction) from the pipeline; and even auto-include re-sourcing events when contracts are set to expire. Requested events can come from any organizational stakeholder with budget or spending authority, and all spend can be placed under (minimal) management.

In addition to this new project management capability, the savings tracking capability can sum up all savings for a period of interest, in real-time, based upon (negotiated) price differentials and (expected/purchased) volumes, or savings numbers (to date) provided by appropriate Procurement or AP reps. The data is tracked in a drillable fashion and a manager can quickly see how the totals compare across categories, departments, and employees. This allows the manager to ensure that high-value categories get sourced first and that buyers who aren’t delivering value get training (or replaced).

The SIM functionality is basic. It allows the organization to track all supplier information of interest, tag the suppliers with key-phrases of interest (for quick selection by category capability, geography, performance, etc.), and build lists for quick selection in sourcing events. There’s no scorecarding or performance monitoring, but it can be used as a supplier master and it’s easy to get data in as supplier data can be loaded from existing platforms, and updated data can be pushed back out to existing platforms, using the API. And the platform makes it easy to track supplier activity — events they participated in, questions they asked, bids they made, and so on.

In the current version of the platform, suppliers can have their own portal where all of the bids they have been invited to by all of their customers are accessible through a single log in, or, if the supplier prefers [or customer(s) demand(s)], they can have a separate portal for each customer. The suppliers also have the same collaboration features available to the buyers and can invite their peers to collaborate on bids and survey responses.

The system is shaping up nicely and for an in-depth dive on ScoutRFP, and the platform, including its strenghts and weaknesses, see the recent Pro series [membership required] over on Spend Matters (Part I, Part II, and Part III) [membership required] by the doctor and the prophet.

Oversight for more than just your Travel & Expense budget management

Oversight is an Atlanta-based software (as a service) company founded back in 2003 to help organizations monitor spending in an effort to identify errors, waste, misuse, and fraud in the grey area of enterprise spend. As every recovery firm will tell you, the average organization will overspend by 1% to 3% as a result of over billings, duplicate billings, unnecessary spend on superfluous demand, maverick spend, and even fraud. (And they make their living recovering a portion of that, typically a third, and then charging you 33% of the recovery as their fee. Sounds small, but 1/3 of 1/3 of 3% of spend is 0.33% of spend, and if the organization spends 100 Million, they get 330,000 for an effort that can be largely automated and, even worse, be avoided with proper up-front spend monitoring.)

For example, if all invoices are compared to invoices and goods receipts before payments are authorized, this can prevent overpayments. Duplicate billings can be identified in the same way (and duplicate payments prevented). Potential fraud can be identified by forcing all invoices from unknown suppliers, for unknown products, or for unexpected amounts to be manually reviewed. (This can’t prevent in-house fraud, where a buyer pays a fake invoice to a fake company controlled by a relative, or a co-conspirator, but it can prevent external fraud.) Unnecessary spend on superfluous demand will require up front requisition control, as will maverick spend, but at least there will be no overspend or duplicate spend that can be unrecoverable once the contract with the supplier expires.

Oversight is unique in that it is not so much a software platform but an insights platform. Employing a team of data scientists focussed on identifying new algorithms and techniques for fraud detection, Oversight uses their in-depth knowledge of fraud to build solutions that will help the clients identify potential cases of fraud that they could never hope to identify on their own. The best most companies can do is sample based audits and spot checks which are unlikely to identify much fraud as these will generally only be on a few percentage of invoices or transactions, and most employees who have been getting away with fraud for a while will not be doing anything obvious, and the fraud will not be detected without correlations across documents and systems. That’s where Oversight comes in.

The Oversight solution is a web-based software solution for automatic spend analysis and identification of high-risk or potentially fraudulent transactions that comprehensively analyzes T&E, purchase card, and accounts payable spend using a suite of statistical, clustering, data mining, break point, rule-based, evidentiary reasoning, and machine learning algorithms that look for discrepancies, suspicious patterns, known fraud, and risk indicators to identify those transactions that need to be manually reviewed. The dashboard-driven, or work-bench driven, interface allows an analyst to drill into suspicious transactions by country, organizational unit, risk level, or exception type and can be configured to show the analyst only those exceptions assigned to her, or her team, or every unresolved exception in the system.

When a user drills in by exception type, she sees an overview of the overall risks by country and can drill into suppliers to see the specific exceptions. When a user drills in by country, she can see the overall risk by supplier and then by exception. In other words, she can drill into at-risk transactions using country, organizational unit, supplier, and at-risk type in any manner they please.

Or, they can look for exceptions by process. Right now, Oversight supports the identification of at-risk transactions in the travel & expense, procure to pay, and purchase card processes and has recently added support for FCPA, Anti-Bribery, and Corruption Risk — including the identification of known politically exposed parties.

Plus, the platform not only integrates with all of the big supplier and financial data providers — such as Dunn & Bradstreet, Bureau van Dijk, and CreditSafe — but also integrates with providers of risk indicator data such as Ecovadis and Sedex Global. Plus, they maintain their own databases of known politically connected parties, gentlemen’s clubs, denied parties, and other parties that an organization typically should not be allocating funds to. This last capability is quite important … just ask American Express which once received a 241K strip club bill authorized by the CEO. (Source: ShortNews)

Since fraud attempts differ by country, and collusion is hard to detect with a standard m-way match invoice processing platform, Oversight brings a powerful offering to the expense management space. It’s a platform worth checking out. For a deeper dive into the platform, check out the recent coverage by the doctor and the prophet over on Spend Matters Pro [membership required]. (Part I is up with Parts II and III coming within a week.)