EC Sourcing: Getting Ready to Take the Mid-Market by Storm

When we last checked in on EC Sourcing, they had recently released an updated version of their basic e-Negotiation suite, Flex RFP, and their Supplier Corrective Action Reporting (SCAR) solution. Their e-Negotiation suite had straight-forward RFX, auctions, and a basic contract repository that was the 80% solution at the time. It couldn’t compete in the big leagues, but that wasn’t the focus — the focus was the majority of the market that the big players were ignoring (by selling overkill solutions the market didn’t need at a price point the market couldn’t afford).

The platform also had basic project management built in to allow customers to define projects — which include suppliers, users, RFXs and/or Auctions; message with users and suppliers — through integrated message boxes and e-mails; and define notifications in addition to standard project management features — such as timelines, state tracking, and document management. It also supported 4 languages, multi-currency, and formulas in auction and RFX weighting, it was a solid solution, which is further evidenced that about 1/3 of their client base are actually Global 3000s that realized that they didn’t need an overkill solution at an absurd price point to meet their daily sourcing needs.

Since we last checked in a few years ago, they have been developing steadily — improving both the base solution and adding new modules and capabilities, including some not found in the majority of e-Sourcing platforms (even when the big guys are included). They have added supplier management and workflow management and improved everything across the board (including, but not limited to, their internationalization with support for a dozen languages so far). The three biggest changes are:

Supplier Management

Their new supplier management module contains everything you would expect, including, but not limited to, self-registration, deep supplier meta-data management and search, and out-of-the-box Big ERP Integration. The supplier management module supports self-registration. When a supplier self-identifies, it will be presented with the default questionnaire(s), and upon initial review, the buyer can select the supplier for on-boarding, generate a full profile, and request that the supplier complete it. The buyer can define as many fields (across questionnaires) as they want, and each field can be tagged, filtered, and searched. Plus, the module, like the rest of the platform, integrates with JDE, Oracle, and SAP out of the box.

Workflow and Configuration

EC Sourcing has moved well beyond basic project management and now includes procurement request functionality (which can kick off a workflow outside of Procurement), deep approval and routing capability, customizeable status information associated with each task, and custom workflow definitions that allow a user to define a complete workflow for any sourcing project, with direct links into the relevant parts of the platform. All of these workflows are 100% configurable by the user, who can create them as templates, copy them, and customize them as needed for each sourcing project. Very few sourcing platforms have this capability, and no other mid-market solution has Procurement project management at this level of configurability and completeness.

e-Sourcing Automation Capabilities

It might sound trivial, but EC Sourcing’s new capabilities that allow the platform to:

  • automatically identify and invite all approved suppliers for a product/category
  • automatically attach specifications to an RFX on a line-item basis
  • automatically calculate advanced weightings and scorings (when the event is created from a template using advanced lots)

is extremely powerful, especially for large events and junior buyers.

Some categories (like office suppliers, MRO, etc.) have hundreds of line items and, for national (and international operations) that are collectively provided by thousands of suppliers. Even if each product or service specification (document set) can be located, uploaded, and attached in 2 minutes, for 210 items, that’s 6 hours of manual labour. And if there are 5 potential suppliers for each item, and no supplier can supply more than 50, it’s easy to conceive that there may be 1,000 different, pre-approved, suppliers. The manual time it would take to identify those 1,000 suppliers and then identify the lots they are allowed to bid on and configure that could be days.

However, with EC Sourcing’s auto-identification and auto-association capability, all approved suppliers in the SIM database can be automatically identified and invited to just the portion of the RFX/e-Auction they have been qualified to bid on and, if the documents follow a naming convention, all of the specification documents can be uploaded in a single zip file and the system will automatically extract the documents and associated them with the line, lot, or event as appropriate. This, as we noted above, can save days of a buyer’s time.

With the recent acquisition of classic mid-market leaders like Iasta (by Selectica, now Determine) and MarketMaker4 (by Xchanging), there are few providers that have been around since the noughts, fewer still with as mature a platform, and even fewer still with almost 2 decades of strategic sourcing advisory and consulting (which is how EC Sourcing started out before it realized that an organization could be much more effective powered by a proper platform as opposed to just a crack sourcing team with limited bandwidth). As a result, EC Sourcing is poised to make a big splash in the mid-market, and with the recent release of its newly upgraded solution, is sure to make one in the years to come.

What’s Your SRM Index Score?

Supplier Relationship Management is a key component of good strategic Procurement management. Good SRM can contribute to lower costs and higher organizational value through higher quality, great reliability, value-add, and innovation that an organization might not achieve otherwise. But how does an organization know how well it’s doing?

One way is to benchmark against its peers. While this will not necessarily tell an organization how good it is doing compared to how well it could be doing, it will tell an organization how well it is doing against its peers, which provide a baseline of how good it could be doing.

So, considering most organizations keep this data private, how do you figure it out? One way is the State of Flux SRM Index. Over the last seven years, State of Flux has collected and analyzed detailed SRM data on over 1200 global companies across the six different dimensions of business drivers, stakeholder engagement, governance & process, people & skills, information & technology, and relationship development & culture.

If your organization takes the SRM Survey (closes July 1, 2016), State of Flux can automatically assess your responses against its database and compute an index score for your organization and instantly let you know if your SRM is undeveloped, developed, established, or advanced. In addition, should your organization desire (and should multiple individuals in different departments complete the survey), State of Flux will also give you a free SWOT analysis on request.

Time to Remove e-Auctions from the Strategic Sourcing Toolkit

Time to face the music. There’s absolutely nothing strategic about them.

Strategic Sourcing is supposed to be strategic. Something that is strategic is something that is carefully designed or planned to serve a particular purpose or advantage. What is carefully designed about an auction, and where’s the advantage from a strategic supply management perspective?

Auctions are not a new invention. Recorded auctions are over 2,500 years old, having been recorded as early as 500 B.C. by Herodotus, who recorded the Babylonian auctions for women for marriage. Shortly after, Romans adopted the practice to auction off the spoils of war, including slaves. (So, not only are you using something non-strategic and ancient you are using something that had its beginnings in oppression and slavery. Think about that for a moment as you write your annual Corporate Social Responsibility report.)

The only difference between the auctions of old and the reverse auctions of today is that instead of selling, you are buying and asking bidders to progressively lower their bid until all but one drop out. And instead of oppressing people, you are oppressing corporations as sellers are told they do not get any business at all unless they bid the lowest, and adhere to that bid, no matter what the toll on them.

And when they were invented, there was no careful design. It was merely a way to close multiple transactions in a short time and get the best price for the best “merchandise”. No thought about how that best price would be obtained ever entered the picture — it was up to the bidder to figure out how he (yes, *he*) would honour his bid.

And there is no advantage. The advantage that auctions are sold on is “savings“. But, as per our last post on Savings Machine or Inflation Nightmare, there is no savings in an auction. None. Any savings identified are illusory at best, and hard costs that will have to be paid in the future at worst.

In fact, what you actually get is risk. Lots of risk. Quality. Compliance. Liability. And, depending on the auction, possibly a dozen other types of risk. How so? Download Sourcing Innovation’s latest white paper on The Dangers of e-Auction, sponsored by Trade Extensions, today and find out the many, many hidden dangers of e-Auctions which could quickly become Procurement’s worst nightmare as long as they remain in the strategic sourcing toolkit.

The Direct Procurement Challenge Webinar is One Week From Today!

That’s right, only one week until the upcoming ISM webinar, sponsored by Pool4Tool, where both the doctor and the prophet will discuss:

  • the direct procurement lifecycle
  • how it is different from the classic indirect procurement lifecycle
    (which was cost-centric perfect for indirect)
  • key requirements to support direct procurement that indirect procurement platforms lack
  • key technological capabilities to truly manage the direct procurement lifecycle
  • 15 ways your platform likely isn’t up to snuff
    (especially if it’s a platform built for indirect)
  • the consequences of using the wrong platform for Procurement platform
    (which can leave a lot of blood on your hands)

The fact of the matter is that you wouldn’t use a Chihuahua to herd sheep, so why are you trying to use a mouse to herd cats (which is mission improbable anyway)? (This is exactly what you are doing if you try to use an indirect sourcing platform for direct sourcing.)

Join our webinar next Tuesday on June 28, 2016 @ 11:30 AM PT, 14:30 PM ET, and 19:30 PM BST (UK Time) and find out why your procurement platform may not be doing your Procurement organization justice!

All attendees receive 1 CEH certificate. This is an ISM webinar after all.

Register today. Don’t delay!

Why Good Procurement Goes Bad. Part II.

Most poor-performing Procurement departments don’t start out bad. They start out with the intentions of doing a good job, at least as good as any other department in the organization (although not necessarily a better one), but somewhere along the way, they stumble, and sometimes fall. And since there are not enough best-in-class Procurement organizations, (8% is a small number), and since there are theoretically more good people out there, we have to ask: why does good Procurement go bad?

Yesterday we covered two major reasons good Procurement departments go bad: strategic blinders (like Excel, where nothing good happens) and efficiency over effectiveness (where process is adopted for process sake and no other reason). Today we’re going to cover two additional reasons.

Relationship Blinders

Sometimes a good Procurement department will start by segmenting spend into strategic and non-strategic, do the right thing and start negotiating the strategic, and then treat those suppliers as strategic suppliers. When the suppliers deliver a more consistent, somewhat higher quality product, at a lower price than was delivered before, those suppliers will be looked upon as partners and, as the relationship cements, the relationship will not be questioned over time. Contracts will auto-renew at annual increases to cover “inflation”, but sometimes the “inflation” will also cover “margin inflation” and the quality of the product will not increase.

Even strategic relationships need to be reviewed and the suppliers subjected to a (360-degree) scorecard. The supplier might still be the best choice, but needs to know that the relationship is being monitored and the goal is that both parties continue to benefit, not just the supplier.

Plus, if a customer never goes back to market, it will never know if new suppliers with production capabilities and innovation capacity hit the market and if some of the award should be shifted to a new supplier to help them become a strategic supplier for the organization’s next generation of products down the road.

Values become Dogma

Values are good things. They should be respected, adopted, and implemented. But they should never become dogma. For example:

Relationships first
is a great idea, especially with strategic suppliers. But, as per above

Relationships above all else.
can blind an organization to faltering performance or better alternatives. Similarly:

Value-add
is great to get in every negotiation and can be a differentiator but

Value-over-customer-desire
can simply increase cost. If the customer is buying a “disposable” product that they plan to replace in a year, they may not want a two-year warranty, and focussing on “value” that the customer doesn’t want just increases cost.

There are other examples, but you get the point. Just like an organization can go process-crazy, they can also go dogma-crazy. Too much becomes as ineffective as too little.

For a Procurement organization to get good, and stay good, it has to reevaluate its processes on a regular basis and not get blinded by its own good intentions.