State of Flux Has the Treatment for Your SRM Ailments: Part VII The SRM Platform Continued

As per our last post, so far in this series we have discussed the need for SRM (Part I), Chicago and a foundation for your SRM effort (Part II), tips and tricks for foundational success (Part III), the importance of good supplier relationships and State of Flux’s latest research report The Business of Supplier Relationships (Part IV), the six pillars of supplier relationships and their importance (Part V), and a review of the coverage of the State of Flux Statess SRM platform to date (Part VI), known as Statess.

The State of Flux platform has been under heavy, active development since our coverage early this year and considerable progress has been made on four fronts:

  • Prospective Suppliers
  • Accreditation and Compliance Tracking
  • Contract Management Enhancements
  • KPI Templates and Dynamic Drillable Scorecards

Prospective Suppliers

State of Flux has been actively developing a supplier self-registration system that allows a supplier to go through a dynamic question-based workflow-driven system that captures all of the information required for the supplier management team to verify, and qualify, a supplier for organization RFXs and innovation challenges. Depending on the industry, geography, and products or services being offered by the supplier, the amount of information required can vary from a few pages to a few dozen pages and the questions required may or may not need to cover environmental, ethical, financial, corruption, sustainability, or related areas of corporate social responsibility and the depth will depend on where the supplier is, what products the supplier is offering, where the products will be sold, and who the supplier is dealing with.

Accreditation and Compliance Tracking

State of Flux has been actively extending their ability to track and manage accreditations, compliance requirements, and compliance incidents. In addition to supporting detailed tracking down to a component level if need be, the system also supports integration with Sedex Global and Ecovadis which contain detailed sustainability and compliance audit data for tens of thousands of suppliers. This makes sustainability and compliance tracking a breeze.

Contract Management Enhancements

State of Flux has also considerably enhanced their contract management solution which can not only store all contracts associated with a supplier, but all historical versions and be used as the system of record during and after contract negotiations. It tracks extensive meta-data, which can be defined by the organization upon implementation, and makes it really easy to identify relevant contracts, track milestones and deliverables, detect termination and auto-renew dates, and tie contracts to KPIs, innovation efforts, and related projects. It is so powerful that a number of their Global 3000 clients are abandoning their e-Sourcing and e-Procurement CLM solutions in favour of the State of Flux solution because a contract is only as good as its execution, and execution has to be managed for success.

KPI Templates and Dynamic Drillable Scorecards

In the brand new release, available now, State of Flux has considerably enhanced the performance module that (now) supports the definition of KPIs, and templates, that can be applied across the supply base, defined down 4 levels, and used in dynamically created drill-down scorecards that show the user exactly what she wants to see with respect to a product line, geography, and/or supplier. In addition, the platform now comes with a number of pre-defined templates for standard KPIs across different performance categories that will make initial scorecard definition easy for the average organization. The user can also define when KPIs and scorecards should be automatically updated and create a dashboard with key (roll-up) scorecards that the user needs to track on a daily basis.

The user interface for Statess has been enhanced and usability is very straightforward. Plus, State of Flux is planning to attack the Master Data Management issue in 2016 and make it easy for an organization to also use the solution as a Supplier MDM tool since it is capable of tracking, and integrating, all supplier related information. It’s really just a formal definition, open schema, and API away from meeting this need.

Societal Damnation 51: Talent

In our last post, we addressed the perpetual damnation of talent tightness in Supply Management, exacerbated by pinchpenny’s who will pay a dime-a-dozen salesperson an executive salary but won’t pay a Procurement superstar a warehouse wage; deep-pocket competitors who will double every offer you make; and IT departments that would rather spend big money on new gadgets than on systems Procurement talent needs to do their job.

But that’s just one side of the coin. The other side of the coin is the talent themselves. If you’re lucky enough to get your hands on true talent, then the true damnation beings.

Every Generation Wants Something Different.

As per damnation 4 on Gen X, Gen Y, and Gen Z, at the tip of the iceberg, Generation X wants stability, Generation Y wants unique opportunities, and Generation Z wants to be jacked in. (Not jacked up, jacked in.) Trying to satisfy all of their different desires is like trying to satisfy all of the different requests that will be received on a transatlantic cruise. No easy feat.

Just because they joined, that doesn’t mean they’ll stay.

The average worker today stays at his or her job for 4.4 years, and that number is decreasing all the time. And in some professions, that’s twice as long as the average. If your job isn’t their bees knees, as soon as a competitor comes along with a sweeter offer, your top talent could be out the door.

If they do stay, they’ll want support. And lots of it.

If you promised them training, they’ll expect it. If you promised they could select the new Source to Pay platform, that project better start ASAP and be delivered in a few months. If it was a senior buyer and you promised them a top notch data analyst to give them all the ammunition they needed in negotiation, you better deliver.

And the more support you give, the more they’ll want.

Top talent wants to excel. No matter how good they do, they’ll always want to do better. (That’s why you want them.) But every tool has its limits, and as soon as the limits is reached, they’ll want a better tool. Every technique has a limit to its usefulness, and when that is reached, they’ll want to learn a better technique. And so on. If you deliver, they will deliver, but you have to deliver. And with the CFO, CIO, COO, and maybe even CEO putting policies in place that drag you down every step of the way …

You get the picture. Talent tightness, and an inability to acquire talent, is a damnation, but so is the talent themselves if you manage to get your hands on them. It’s a can’t live with ’em, can’t live without ’em scenario.

State of Flux Has the Treatment for Your SRM Ailments: Part VI The SRM Platform

So far in this series we have discussed the need for SRM (Part I), Chicago and a foundation for your SRM effort (Part II), tips and tricks for foundational success (Part III), the importance of good supplier relationships and State of Flux‘s latest research report The Business of Supplier Relationships (Part IV), and the six pillars of supplier relationships and their importance (Part V). While all of this is important, it only discusses part of the treatment — the process part. As has been indicated, another part is also needed — the platform part.

In addition to offering a foundation for SRM and a process, State of Flux also offers a platform, which was recently renamed Statess and covered in our 3-part series on stabilizing your State of Flux earlier this year (Part I, Part II, and Part III).

The State of Flux Statess platform is a modular, flexible, and adaptable platform that is designed to meet your:

  • relationship management,
  • risk management,
  • performance management,
  • contract management,
  • innovation management,
  • sustainability & CSR,
  • benefits management,
  • category management,
  • intelligence, and
  • programme management needs.

The platform, which was designed to be easily configurable to provide the organization and the supplier with a 360-degree view from the buyer and supplier homepages, allows the buyer to create customized scorecards and reports using configurable widgets that can access data in any part of the implemented system. Moreover, should third party data feeds be enabled (through third party plug-ins), the buyer can also access trading information related to the supplier and its products, related news feeds, and third party intelligence on the supplier.

This third party data can be used to augment the very extensive supplier profiles the system allows you to maintain. Good SRM requires good SPM (Supplier Performance Management) which in turn requires good SIM (Supplier Information Management), so it should come as no surprise that the State of Flux platform is a first rate information management platform. These extensive profiles include information on the supplier’s organizational structure as well as extensive governance information that includes the individuals responsible for the relationship on both sides.

Furthermore, information collection is quite easy as the platform supports a very powerful generic survey mechanism that, like a good RFI solution, allows multiple types of surveys to be built with multiple sections, different response types (checkbox, numeric fields, free text, etc.) for each question, and automatic weighting mechanisms. This allows the organization to prepare the appropriate internal performance surveys and external 360-degree surveys that form the basis of good performance, CSR, Risk, and Relationship management programs.

Our third post in our series briefly covered the contract management, performance management, risk tracking, and innovation modules as well as the programme module which manages the projects. Each project can be associated with a business unit, one or more contracts or bids, zero or more other modules or initiatives in the platform (including performance management, risk management, and innovation), and can consist of one or more stages or tasks defined in accordance with well understand project management methodology.

And, as per our last post on the subject matter, the platform, while quite extensive, is still under active development. In our next post, we’ll discuss a few of the new features of the State of Flux Statess platform as well as some key features not addressed in our previous series.

Societal Damnation 50: Talent Tightness

Your organization is expected to deliver 6 miracles on a daily basis, and at least one before the CFO arrives for work. But, as we all know, miracles, by definition, are almost impossible. That’s why, in order to have any hope of accomplishing the nearly impossible feats put before you on a daily basis (such as sourcing an additional 1,000 kgs of dysprosium by the end of the week, even though a major mine just collapsed, and knock $50 off the price per kg [10%+] while you’re at it even though you’re in the midst of a supply shortage), you need exceptional talent.

But such talent is rare, especially when you need true polymaths who are simultaneously geniuses and jacks of all trades and a master of one (Supply Management). This says that only a small fraction of a percent of the population are even intrinsically qualified for Supply Management, and given that these individuals can, by definition, do anything they want, how many are going to want to do something us unglamorous as Purchasing. (Especially considering that, as far as the average person knows — which should not be a surprise considering most curriculums at the Universities they went to still teach decades old operational management theory as the basics of Supply Management — choosing Supply Management means being stuck in the dungeon in the tower of spend.)
This challenge is only exacerbated by the fact that:

Sales gets commissions on every dollar sold, even if such sales cost the organization money, but Procurement’s bonus for identifying value is at the complete whim of Finance.

Procurement could identify, and lock in, $100 M of expected savings on a Billion of spend, primarily through the Herculean effort of a small core team of 10 analysts, negotiators, and project managers, work with Engineering and Marketing to realize $70M of that, or $7M of savings per Procurement team member, who, because the CFO decided that they should have realized 50M anyway, decides to only credit the team with 20M of savings, or $2M per member, and give them a mere 1% of that as reward, or 20K. Meanwhile, the top 10 Sales people, who delivered an average of 1.5M each above their 1M (non-commission) quota (as they get a 150K salary), get a 10% commission on that 1.5M and effectively double their salary, even though only a fraction of the revenue hits the bottom line. For example, if the COGS is 70% and they get 10% commission, 20% of that, or 300K per sales person, hits the bottom line before taxes. But 100% of the savings per Procurement professional, or 2M in the CFO’s discount approach, hits the bottom line before taxes. But they only get a 1% reward for their bottom line contribution while the sales people effectively get a 50% reward for their bottom line contribution. Is that fair? Not at all. And that’s why you can’t get good talent and why all the high EQ people go to Sales.

Moreover, if the savings don’t materialize, or don’t materialize to the extent expected, through no fault of Procurement (because Engineering or Marketing decided to go off the plan or off the contract), Procurement will still be held responsible and Procurement will be rated poorly and the dream team who worked their collective assess off will get nothing at bonus time but a bad taste in their mouth, and instantly leave for the competitor who pays them the most (while giving your firm a bad rep in the process as they will be very frank about why they left your cheap, ungrateful, backwater organization).

Your competitors are desperate too, and those with deeper pockets will outbid you for top talent.

It’s not all about money, and that goes double for top talent, but that being said, money is a factor, and if your competition is offering 20%, 30%, and even 40% more, that’s a little hard to turn down. Especially if they are also offering flexible hours, training, course reimbursement for any course taken on the employee’s own time where the employee gets a minimum / passing grade, etc. So if your training budget is still 0, your corporate policy still mandates being in the office from 9 to 5 (even though your suppliers are in a time zone 9 hours shifted and this means everyone would be working 11 hours any day a supplier has to be consulted), and there are pay ceilings in effect from 5 years ago, the chances of getting anyone talented to join your Procurement department are slim to none, with an emphasis on none.

Talent wants to be sufficiently challenged and sufficiently enabled.

They know they have a challenge, but they also want to know they have the tools to tackle it. If you expect them to work for you, you better have some decent tools. It’s not the Procurement dark ages where the best tool available is an Excel spreadsheet and e-mail to deliver it. If that’s all you have to offer, don’t be surprised if they run to the hills.

Talent is tight, and everyone is working against you to keep it that way. Finance with unfair compensation policies. Competitors with deeper pockets. And the CIO who thinks the IT budget is better spent on new iPhones for the masses, even though they all got new iPhones last year! But this is just one side of the damnation …