Global Process Ownership: The Other GPO

As organizations seek to become more efficient and effective, one proven strategy is the ability to manage cross-functional processes using a global process ownership (not “group purchasing organization”) model.
the maverick, “Exploring Procurement’s Other GPO”, Spend Matters

GPO is harder than it looks. As the maverick points out, it’s ultimately about having both accountability for an end-to-end process and the ability to control the strategies and resources used for the process execution. If Procurement is made accountable, but Finance and the Engineering organization controls the financial and physical resources, then Procurement cannot control the global process. And this is another reason why the full extent of negotiated savings and identified value is never realized and end results are never as expected. Because, without control to go with the accountability, Procurement cannot execute. Planning, which is just another word for Knowing, is only half the battle. And it’s a shame the CFO and the rest of the C-suite don’t remember this single lesson that they should have been paying attention to when watching G.I. Joe every Saturday morning. (It was supposed to be about more than just blowing stuff up, even though that is what is perceived as the American way.)

Of course, this assumes that Procurement even knows what to do. As the maverick goes on to explain in his next piece on “the 3 dimensions of global process ownership”, global process ownership is more than just process breadth / scope. It’s also, as some of the leaders recognize, organizational breadth / scope as most Procurement-based processes have repercussions and effects throughout the organization, and, more importantly, category management breadth / scope. The organizations that understand, and effectively execute against, this third dimension are the organizations that truly excel and make their way into the Hackett Group top 8%. Different categories have to be managed in different ways. There is no one-size-fits-all process or organizational framework.

And that’s one of the many reasons sourcing must be strategic.

ERP is Not Enough!

When your organization was sold its Enterprise Resource Planning (ERP) solution suite back in the 1990s or 2000s, it was probably told that the ERP suite was the answer to all of its information management problems and it would be the last suite the organization would ever buy. As the evolution of Manufacturing Resource Planning (MRP) software — which was focused primarily on product planning, manufacturing, and inventory management — ERP was supposed to address all of the weaknesses in the MRP software as well as give Sales and Marketing, Finance, and Executive Management visibility into operational status. Specifically, ERP was supposed to handle sourcing and procurement, receiving and distribution, sales forecasting and integration into production planning, and provide a solid foundation for accounting and finance. ERP was supposed to provide the organization with a real-time end-to-end view of core business processes that could be used to effectively monitor, manage, migrate, and market the business. ERP was supposed to be delivering on the single system promise that you were waiting for since the dawn of MRP. But it didn’t.

“Why ERP is not Enough” by b2bConnex (Registration Required)

Those of you who are regular readers know that SI rarely promotes vendor-authored white-papers, as many turn out to be more marketing fluff than solid content, but every now and again SI finds a real gem, and this paper is one of them. Not only is it a solid, factual, educational piece, but it’s echoing a message that SI has been promoting for years (and often while screaming at the top of its lungs). ERP is Not Enough, and the continued over-reliance on ERP is why so many organizations, especially in manufacturing, are struggling to find efficiency, savings, and value in their supply chains.

Even though Sourcing and Procurement platforms are now mature technology, the number of your peers that have still not adopted modern platforms is still quite high. That’s why a number of new SaaS-based start-ups are still finding success a decade later with streamlined, on-line, implementations of sourcing or procurement modules that are almost a commodity at this point. When a company finally realizes the value, SaaS allows for a quick, easy, low-cost entry point to a modern platform.

And a modern platform is needed. Just because your ERP might support document exchange, that doesn’t mean it supports online tenders. Just because it supports price quotes doesn’t mean that it can maintain detailed price history and do trend analysis. Just because your ERP can store a contract doesn’t mean that it can store all of the delivery schedules, rate tables, and agreed upon performance metrics in formats that can be easily accessed, queried, and automatically compared to invoices and time sheets. Just because it can store a PO, that doesn’t mean it can store a full requisition and approval history. the doctor is sorry to say that he knows of more than one company that has spent over a million dollars trying to implement a good e-Negotiation platform or contract management platform on an ERP, only to fail when they could have bought a best-of-breed solution for 1/10^th of the cost.

One has to remember that where ERP is concerned:

it is still rooted in MRP & on-site inventory management
and distribution, logistics and supply chain optimization was never in the core vocabulary
it is all about reporting
but supply chain success is all about analysis and actionable data
it is designed around an old-school data store with a rigid format
and not a modern, extensible, workflow-based Master Data Management model
it was based on the concept of an activity journal
not around transition management for an evolving supply chain
it is internally focussed
but supply chain management needs to be externally focussed

This paper addresses all of these issues in detail, outlines the shortcomings of an ERP, and helps you understand why you need, depending on your business, a modern sourcing platform, a modern procurement platform, or, particularly in manufacturing, a modern supply chain communication and collaboration platform that handles all of the communications necessary between a provider of consumer or manufactured goods and their product and component suppliers from the initial tenders through the delivery of the final goods receipt and invoice pair when the contract has been completed. Moreover, the paper does this without any reference to any particular platform or marketing spiel and really helps you understand why your ERP is not, and will never be, enough and why you have to move to modern Sourcing / Procurement / Collaboration platforms, depending on your vertical and needs.

If you are not on a modern Supply Management / Supply Chain Collaboration platform, the doctor strongly encourages you to register for, and download, Why ERP is not Enough today and spend a good deal time of understanding the issues addressed. The sooner you understand what you need and why you need it, the sooner you can acquire the right platform and supercharge your supply chain. All the technologies you need to do so are out there waiting for you. You just need to know what to look for!

KWIPPED: Simplifying Rentals for Your Business Needs

In our last two posts, Robin Salter of KWIPPED introduced us to the many benefits of an online marketplace for rental procurement. KWIPPED is one of the, if not the, first general purpose marketplace for your business rental needs. Launched in late February, KWIPPED is closing in on 100 suppliers that can meet your rental needs across 17 categories:

Audio and Visual Equipment
Electronic Test Equipment
Environmental Testing Equipment
Heavy Equipment
HVAC Equipment
Laboratory Equipment
Medical Equipment
Surveying Equipment
Work Zone Safety Equipment

Computer Equipment
Farm Equipment
Film Production Equipment
Material Handing Equipment
Oilfield Equipment
Power Equipment
Telecommunications Equipment
Welding Equipment

Like all modern online marketplaces, KWIPPED is simple and easy to use. All a buyer has to do is

log on to the site
fill out a request
let the system direct it to the appropriate, verified, suppliers with potentially matching inventory
wait for quotes

Once a quote to your liking has been received, you can accept it and check out on the site. The site then collects the first payment and seals the rental contract on your behalf. It’s that simple. And the next version coming late this quarter will allow you to check out commodity rental items on the spot – no RFQ needed. Quick and easy like rentals should be.

KWIPPED will do for rentals what sites like BuyTruckload.com did for truck rentals and turn the commercial rental industry on its head. It’s Rent-a-Center for business. Check it out!

How an Online Marketplace Can Improve Equipment Rental Procurement Part II

Today’s guest post is from Robin Salter, CMO of KWIPPED.

In Part I, we noted that even though there are currently a few online marketplaces that support the construction/heavy-equipment industry, there are no true online marketplaces for equipment rental even though it is estimated to be a $38 Billion to $50 Billion market, of which construction equipment represents less than half of all rentals. In today’s post we will address the potential benefits of an online marketplace for equipment rental, but first we will discuss traditional equipment rental sourcing as a foundation.

Traditional equipment rental sourcing

When there’s a job to be done that requires equipment rental, the first step is sourcing the equipment. Most organizations have a policy that requires multiple rental quotes from multiple suppliers in order to establish a basis for comparison and leverage the cost reduction power of competition. The traditional equipment rental sourcing process looks something like this:

Research potential suppliers
(that carry your required equipment) through association directories, online searches, referrals and other channels.
Contact the suppliers and do further background checks
to ensure the suppliers are legitimate and reliable.
Submit quote requests to each supplier
that met your preliminary criteria. There will likely be some back and forth communication with each supplier to clarify rental details.
Research additional suppliers
after discovering that certain suppliers don’t have the required equipment available at the required time or don’t carry all of the equipment that the organization needs to rent.

How does an online marketplace benefit equipment rental sourcing?

Added efficiency

Procurement staff (or whoever is in charge of sourcing the equipment) could visit a single website. Select the equipment needed with a few clicks. Provide the details and dates just once and then allow the marketplace platform to do the work. Your single quote request would be automatically and immediately delivered to all of the marketplace suppliers that meet your rental criteria. Any additional details that you may need to communicate can be sent through the system once and distributed to all of the participating suppliers simultaneously.

The system manages the research and communications for you and then delivers multiple, side-by-side quotes for easy comparison. If you need to rent equipment immediately and don’t require quotes, a quality rental marketplace would offer the ability to select and rent specific equipment directly from uploaded supplier inventory. Tasks that traditionally takes hours, days and even weeks could be accomplished in minutes in an online marketplace environment.

Growth opportunities

An online equipment rental marketplace would provide such efficient access to all kinds of equipment that businesses could easily take on projects that they may have previously turned down due to a lack of equipment. In fact, a marketplace filled with categorized equipment could empower a business to proactively discover new ways to expand their services and their customer bases, simply by renting equipment they don’t currently own. Scrolling through various equipment categories could generate creative ideas about new service offerings and allow businesses to test them out without a large capital investment or strain on cashflow.

Quality Assurance

When the completion of a job is totally dependent on having the right rental equipment, it’s important to rent from suppliers you can trust to deliver quality equipment, and on time. A good online equipment rental marketplace will have processes in place to ensure the quality of their suppliers so you don’t have to waste time doing background checks and investigations. Suppliers are not only typically certified by the marketplace itself, but most online marketplaces will also include a rating system that allows renters to review and rate suppliers based on their experiences.

Cost control

Because marketplaces aggregate lots of rental activity, they usually have access to lots of data about how much specific equipment rentals should cost. A good marketplace will create a truly competitive environment, which is always good for the renter. Some marketplaces will even offer transparency so renters can easily see the going rates based on real-time rental transactions.

The time has come for a comprehensive equipment rental marketplace.

Thanks, Robin.

How an Online Marketplace Can Improve Equipment Rental Procurement Part I

Today’s guest post is from Robin Salter, CMO of KWIPPED.

Today, when people are planning their vacations, they typically use an online marketplace like Travelocity or Expedia. Why? Because if you need to book a flight, hotel, rental car or some combination of the three, it’s much faster and easier to go to a single website that:

Displays availability
Provides ratings and descriptions
Offers pricing comparisons
Enables scheduling and booking

The cumbersome, time-consuming alternative is to research and compare each airline, hotel and car rental company individually before making a particular booking decision. The online marketplace model provides obvious benefits to the traveler in the form of convenience, simplicity and efficiency. Of course, the travel industry is just a single example. Online marketplaces have popped up across virtually every industry — and why wouldn’t they — the benefits they offer to buyers and sellers are undeniable.

Oddly, the B2B equipment rental industry has been slow to adopt the online marketplace model despite the fact that the granularity of the industry seems to make it a natural fit. There are more than 27,000 rental businesses in the U.S. and that number does not include many businesses that may not consider themselves rental businesses even though they do rent certain equipment.

It’s important to point out that there are currently a few online marketplaces that support the construction/heavy equipment industry; but equipment rental is estimated to be a $38 – $50 billion market, of which construction represents less than half. Businesses and organizations rent all kinds of equipment, for example:

Medical equipment
Laboratory equipment
Audio/Visual equipment
HVAC equipment
Farming equipment
Film production equipment
Electronic testing equipment
Environmental testing equipment
Materials handling equipment
Roadwork safety equipment

The list is practically endless, but the point is, equipment rental is big business and is ripe for an online marketplace that provides the technology to connect renters and suppliers across all industries in a more efficient and productive way.

In Part II we will discuss how an online equipment rental marketplace differs from traditional equipment rental sourcing and the advantages it brings.