Procurement Is NOT Hard — But You Do Need The Right System! (Part 1)

Not that long ago, SI published a piece that Procurement Should NOT Be Reimagined!. While there was little public response, there was some private response as some, like the doctor, wondered why some people were stating that Procurement needed to be reimagined (besides the mad marketers trying to spread the marketing madness) while a couple of old grey beards (who have been around since before S2P systems hit the scene) offered some deep insight having seen the progression of Procurement since the first custom Procurement solutions hit the market until the present day.

The insights centered around the facts that:

  • grand proclamations make for grand marketing
  • over complications of relatively simple processes makes for big consultancy projects (just because something requires a lot of steps or a lot of paperwork doesn’t mean that it’s complex, but if you think it does …)
  • if you say it enough, Procurement Pros start to believe it
  • if they believe it, don’t have the training to do the job, or, are just lazy, convincing management that it’s complex minimizes their accountability if they screw up (or don’t have the training to do it right)
  • hiring overpriced consultants allows them to pass the buck

With the exceptions of:

  • marketers wanting to add to the madness
  • consultants wanting to make another six to eight figures

The two roots of the problem are that:

  • many Procurement Pros, for one reason or another, believe it is complex
  • some don’t want the responsibility or the workload (which can be heavy without the right system)

So why do they think it is complex?

The Procurement process is very involved. Even the identification of a new commodity vendor is quite a process. First you have to identify suppliers that supply a product that meets the specification. That means a lot of searches, a lot of specification reviews, and then the creation of a list of potential suppliers.

Then an RFP has to be created that defines all the specifications for the product, as well as all the requirements a supplier has to meet to be considered. This requires more work.

Then the winning supplier(s), and back-ups, have to be onboarded (in case negotiations fail with one or more of the winners), and, these days, that’s quite an ordeal. Verify the supplier’s business details, their insurance, their regulatory compliance, their risk profile, their banking information, etc. etc. etc.

Then, when you make the award, you have to populate the catalog, define the budget categories, preferred status, etc.; define the rules on who can buy/reserve from inventory; define the rules when the (combined) purchase orders are placed; define the approval rules/chains; etc. And then set up the invoice processing and verification rules, the matching rules, and the payment rules.

And then, when the orders come in, verify them, approve them, deal with the match discrepancies, authorize and make the payments, and then manage the inventory.

Nothing about this is complex, because, as we said, the foundations of Procurement and Purchasing haven’t changed since the first manual was published 137 years ago, its just that more steps were added and, more importantly, the introduction of bad Procurement systems that took a simple, but involved, process and turned it into a nightmare.

… to be continued.

So You Admit You Might Be a Dead-Company Walking. How Do You Avoid the Graveyard? Part 1

Good for you. It takes a lot of guts to admit you’re screwing up badly, burning cash faster than you’re taking it in (or able to raise it), and that you boarded the hype bus heading straight for the edge of the cliff before making sure the brakes and steering wheel worked! (So much so that the doctor wasn’t really expecting you to admit it. That’s why, this time around, his dead company walking series was targetted at buyers to help them avoid companies who won’t do what it takes to survive the coming market crash in our space.)

Fortunately, the fact that you admit it now, before the market situation gets really bad, means that you likely still have time to get treated, recover, and make a comeback before you bleed to death. So what do you do?

In short, you

  1. start by admitting to every mistake you are making and do something about it, even if it means ousting part (or all) of the founding team (assuming they don’t still have a majority control, in which case you jump to the next ship while there are still ships sailing to jump to) then
  2. continue by looking for cost-effective opportunities for improvement and pursue them and finally
  3. never, ever, ever forget the timeless basics.

Today, we’ll start with describing what you do when you identify, and admit to, the first mistake we chronicled in our two part introduction to our “dead company walking” (Part 1 and Part 2) series (where we helped your potential customers identify problems that signify you are a SaaS supplier they should be walking away from).

1) Too Many Assumptions, Too Few Verifications

Double Down on Market Research – Know Your Competition

You’re not selling in a blue ocean. You’re selling in a very crowded ocean, and if you did your market research (or even glanced at the Mega Map, you’d know it! Depending on your core offering, you have at least 50 competitors, and even if you focus in on an industry niche or market size, at least a dozen, if not two. And there’s only so many customers to go around, which means there’s only room for a handful of companies with your specific focus to be smashingly successful.

So learn who they are, what they do, and, most importantly what they don’t do that they should do, and then do that, because, at the end of the day, you need to sell on core and differentiated value.

Double Down on Market Research – Know Your Target Customer’s Pain Points

Your customers don’t want cool. They don’t want custom Aston Martin’s that need to be tuned by a high price mechanic every month to keep running and can’t be driven on anything but the smoothest of roads. They want Ford tough F150s that only need maintenance every six months and can withstand the rugged terrain they work in.

They want a platform that helps them do the job they have to do everyday, the 80%, not the frilly 20% and nothing else. Learn their pain, and, most importantly, after the core pain is solved, focus on their frustrations that your competitors aren’t. That’s the core and differentiated value that will make you super successful, not whatever technology is currently hyped to be in Vogue. After all, like real fashion, tech fashion changes (and in some cases goes out of style) every few years, and doesn’t necessarily solve any problems in the first place (like Gen-AI).

Get Help! You’ll Only Identify So Much On Your Own.

Especially if you’re new to the space and started your company because you were a purchaser forced to use tool X that didn’t do function Y at your last job. You know one tool well, the two competitors who were finalists in the RFX okay, and that’s it … especially since your lack of understanding of Procurement (marketing) terminology led you to believe that the first few results of a Google search and the Gartner/Forrester maps chronicled every vendor you need to know. Which, as one glance at the Mega Map should convey, is not even close.

Plus, you knew your company’s processes, and, if you were involved in an association and actually went to meetings and roundtables, maybe a couple others. But now you have to serve industries and quench the thirst of multiple types of buyers. You need the help of someone who has seen the rise and fall of companies in this space from 1.0 through the current 3.0+ offerings and knows the products, the players, and the pain well if you want to quickly zero in on what the core and the differentiation actually is for your company.

Stay tuned for Part 2!

Dear Americans …

You need to understand what Project 2025 is BEFORE the election.

At 922 pages, it’s unreadable. Fortunately, you don’t have to!

A group of people read it and summarized it for you in a 4:32 video!

It’s within your maximum attention span! Enjoy!

Direct Link

Also: you can start with the Wikipedia Page:
Project 2025

Data, Technology, and Insight.

Data is just data.

Tech, even “AI”, is just tech.

Insights only come from Human Intelligence, and, specifically, from the people with the Knowledge of the Data and the Wisdom to apply the right technology that uses the right methods to extract the right Insights.

That’s how it’s always been, that’s how it is, and until we have real AI*, that’s how it will be.

the doctor has written about aspects of this many times here on Sourcing Innovation and on LinkedIn.

However, if you haven’t yet, today he wants you to read the words of wisdom from THE REVELATOR. It’s important you understand what data democratization, data visualization, and Ozempic have in common.

* (which will likely bring about our destruction very shortly after it is created, but that’s a different article)

Before You Get All Excited for Fall Conference Season

Read SI’s “Conference Season” series from a decade ago, and then tell me, with the exception of:

  • Gen-AI being the new fluffy magic cloud
  • Fake-take (sorry, intake) being the new dangerous and dysfunctional dashboards

Has anything really changed since 2014?