The Six Commandments, err, Philosophies of Procurement, Hindu Style

A few weeks ago, on Canada Day, while LOLCat was proactively learning the pledge of allegiance (which LOLCat will need when Canadians re-elect Harper), Mr. Smith asked on Spend Matters what were “The Ten Commandments of Procurement”  that you adhered to that were absolutely, unarguably, true under all conditions.

To get your creative juices flowing, two weeks ago, Sourcing Innovation gave you the Ten Commandments of Procurement, Christian Style. And in case that wasn’t enough, last week SI gave you the Ten Commandments, err, Precepts of Procurement, Buddhist Style and told you that SI was going to tackle at least one more style, because everyone deserves equal opportunity. Today we’re going back to the third most followed religion on the planet and give you the six commandments, err, philosophies, of Procurement, Hindu Style.

6. I will not make assumptions on prices, demands, or needs before collecting the appropriate information and market intelligence.

We all know the saying about people who make assumptions, and what they make of themselves. I know this to be true so I will always select categories for sourcing events, estimate demand, and negotiate, based upon research and fact and not upon gut feeling or inflated GPO claims.

5. I will take a holistic logical view of cost and return and use the appropriate tools to understand the true costs and build a realistic picture of the expected value of a product, service, or supplier relationship.

Cost is more than just the price. It’s the transportation. It’s the import and export duties. It’s the temporary storage. It’s the utilization. It’s the reclamation and return (under warranty). And the value of each product is not just limited to the cost I pay, but the quality, reliability, and other intrinsic value in the mind of the consumer. I will understand both before pursuing a product, service, or even a supplier relationship.

4. I will not be vain or assume that just because I am the expert, I am always right. I will listen with an open mind and continuously seek to learn and better myself.

I am the expert in Procurement process, and will generally know more than my peers, but I am not necessarily the expert in the product being bought, the market being bought from, the market being sold to, all of the transportation options available, or the intricacies of production or utilization. Moreover, I recognize that the market research I acquired may not be fully up to date or take into account unusual characteristics of the organization’s needs, the suppliers capabilities, or sub-markets. I will listen to others in the organization who have this knowledge and consider all relevant input before making any decisions.

3. I will be socially responsible and only work with suppliers who have the same views.

I am not just a lone Procurement professional in an ivory tower, I am a human being and a citizen of this planet and every decision I make will have a ramification on others that could go beyond just my coworkers, my suppliers, and my customers. Moreover, every effect I create has an effect on me as well and I will have to live with the effect I create on others and my self, so I will endeavour to create the best effects I can.

2. I will not succumb to pressure and make hasty Procurement decisions because any mistake I make will cost the organization in the long run.

All organization suffering results from mistakes made in the past that were produced by activity that was the result of insufficient knowledge or a lack of (social) responsibility. As a result, I will not rush a sourcing decision and cut a contract or make a buy without adequately considering all of the facts and options available to me in order to make sure I make the best decision for the organization that can be made at the time I make it.

1. I will not act without forethought and planning for what I do dictates what I will get.

The effect I get is pre-existent in the action I take. So not only will I make the best sourcing decision I can, but will also ensure that all of the actions I take with respect to contract management, performance management, supplier management, and risk management are carefully considered and made in line with the organizational goals and carried out with responsibility, respect, and an open mind.

Contract Lifecycle Management III: Do You Know Where it Came From?

In our first post, we introduced you to CLM, short for Contract Lifecycle Management, which is arguably one of the most uninspiring acronyms in the Supply Management space, but also one of the most important as it overlaps S2C, P2P, and, as a result, S2S/S2P as well as intersecting with risk management, performance management, change management, and supplier (relationship) management. In other words, as succinctly stated in our last post, CLM touches almost every aspect of Supply Management and is taking a central place in your Supply Management organization.

And, in our last post, we tried to define where CLM starts and ends, but, as per our first post, the key questions are: what exactly is CLM, why do you need it, and, most importantly, what defines the core CM (Contract Management) platform that powers CLM? And why?

As per our first post, to answer these questions in a standard, and open, manner that will allow for common, comparable, measurements across the vendor-base that will not change from quadrant to quadrant or wave to wave, Spend Matters and Sourcing Innovation have come together to create common definitions for critical Supply Management technologies, starting with CLM. This effort, led by the prophet, the maverick, and the doctor, has resulted in an initial, landmark, ten-part series on CLM over on Spend Matters Pro [membership required] that begins in “Contract Lifecycle Management Part I: An introduction” and that will continue until CLM is made clear.

In the first part of our ten-part series we defined what CLM is, discussed some critical requirements, and indicated future posts would detail what technological capabilities were required to support them. But before we can get to that, we have to understand where the solution space is today and why existing platforms, on their own, don’t meet all of an organization’s needs, and how what’s out there currently fits together. That’s why “Contract Lifecycle Management Part III: The Solution Space” examines the space and helps you understand where CLM fits.

While Contract Management solutions have been around for a while, they weren’t the first set of solutions in the Supply Management space, with e-Sourcing (and e-Auction) and e-Procurement (and e-Invoicing) solutions taking they lead. Early Contract Management solutions materialized in the Supply Management space as a result of gaps in process support left by the other solutions. But as Supply Management matured, many of these first generation systems showed gaps themselves, and Contract Management is now much more than just a contract authoring, signing, archiving, indexing, and searching platform that first generation vendors will make it out to be. And this starts to become clear when you examine the solution space as a whole and see where all the pieces fit, or don’t fit, together.

The reality is that the Supply Management space is big, the full CLM process is involved, and CLM knowledge gaps are very common — but they don’t have to be! Head on over to Spend Matters Pro [membership required], check out the latest piece by the prophet, the maverick, and the doctor, and understand how the The (Supply Management) Solution Space currently fits together. You won’t regret it.

Seventeen Hundred and Fifty Years Ago Today

What may have been the deadliest tsunami of all time devastated the city of Alexandria, Egypt. The tsunami, caused by the Crete earthquake (which was estimated to be an 8.0 on the Richter scale), killed over 5,000 people in the city and more than 45,000 outside the city. However, the damage from the tsunami (which was estimated to be more than 100 feet high) was not limited to Alexandria and affected the entire eastern and southern shores of the Mediterranean and also devastated a number of cities (in what is now Libya and Tunisia) and almost wiped out Greco-Roman civilization in North Africa. The death toll is estimated to be somewhere between 300,000 and 500,000!

And yet, way too many people are still surprised when massive tsunamis, such as last year’s Chile Tsunami, 2013’s Solomon’s Tsunami, or significant 2011 Japan Tsunami strike, devastate cities, and cause major disruptions to our supply chains.

These events have been recorded for over 2,441 years, ever since Thucydides described how the tsunami of 426 in the Malian Gulf affected the Peloponnesian War, and we know the exact date for major historical tsunamis all the way back to 79 AD (when the eruption of Mount Vesuvius, which buried Pompeii and Herculaneum)! Every time a major earthquake or volcanic eruption occurs along the coast, which is where most occur because that’s where most of the fault lines between tectonic plates are, they happen. And massive damage and disruption results. We should not be surprised and we should be prepared.

And even though SI usually restricts its history lessons for the weekend, this event was so significant, and so overlooked, it had to make an exception.

And while this has little relevance for Supply Management, a very historical event in American history happened 150 years ago today. At 6 pm in the town square of Springfield, Missouri, “Wild” Bill Hickok shot, and killed, Davis Tutt in what is, on record, the first “quick draw gunfight” that is commonly portrayed in western movies. (For this act he was arrested with murder, which was reduced to manslaughter before the trial, which resulted in his acquittal under the unwritten law of the “fair fight”.

Contract Lifecycle Management II: Do You Know Where It Starts and Ends?

In our last post, we introduced you to CLM, short for Contract Lifecycle Management, which is arguably one of the most uninspiring acronyms in the Supply Management space, but also one of the most important as it overlaps S2C (Source-to-Contract), P2P (Procure-to-Pay), and, as a result, S2S/S2P (Source-to-Settle/Source-to-Pay) as well as intersecting with risk management, performance management, change management, and supplier (relationship) management. In other words, CLM touches almost every aspect of Supply Management and is taking a central place in your Supply Management organization. But where exactly does it start and where exactly does it end?

The short answer is that it starts with data and ends with data. For example, in order to identify contract opportunities, spend, product, and service data is needed. To create good specifications, good data is needed. Authoring requires contract clauses in a clause data library. Contract Management requires term and obligation data. Performance management requires performance data. Risk Management requires event data. And so on.

However, in between, it includes the usage of that data in various obligatory, performance, organizational, and strategic processes designed to extract value from the contract. These processes make use of an extensive data repository and support organizational commercial performance management (that takes CLM to the next level).

The repository will contain clauses, templates, contracts, supporting documents, amendments, and metadata. This will support the authoring, negotiation, signing, and implementation of the contract, where the implementation will require monitoring, management, and corrective action. It will also track, and support expiry, closure, review, and, where appropriate, renewal. And, collectively, each of these activities will be seamlessly blended together to support Commercial Performance Management.

How? That’s what the first-of-its-kind co-authored CLM series by the doctor, the prophet, and the maverick will answer over on Spend Matters Pro [membership required], after it presents “The CLM Wheel”, which is the first accurate graphical representation of the continuous CLM process at a high level. Go check it out and then we can begin to address the question, which will involve first going back to the beginning in our next post.

One Hundred and Fifteen Years Ago Today

The first line of the Paris Metro, which was only the fifth subway in the world at the time, opens for operation during the Exposition Universelle. And one hundred and fifteen years later it is the second busiest subway system in Europe (after Moscow).

While not critical from the perspective of moving goods in the supply chain, it is important to remember that the information, finance, and physical supply chains all run on people, who have to get to work, get around, and get things done. Something tough to do in a big, dense, city with well over 10 million people.