Monthly Archives: December 2023

Source-to-Pay+ Part 8: Analytics / Control Center

In Part 1 we noted that Risk Management went much beyond Supplier Risk, and the primitive Supplier “Risk” Management application that is bundled in many S2P suites. Then, in Part 2, we noted that there are risks in every supply chain entity; with the people and materials used; and with the locales they operate in. In Part 3 we moved onto an overview of Corporate Risk, in Part 4 we took on Third Party Risk (in Part 4A and Part 4B), in Part 5 we laid the foundation for Supply Chain Risk (Generic), in Part 6 we addressed the first major supply chain risk: in-transport, followed by the second major supply chain risk: lack of multi-tier visibility in Part 7.

In almost every article to date, we’ve highlighted that a key aspect of every risk management system is good analytics, and, in particular, a good control centre to manage the data, the analytics, and the insights gained from the analytics (as well as the plans created around those insights).

Capability Description
Graph (Analytics) Support Standard analytics based on numeric data is not enough. As we have illustrated through this series, risk is more than numbers, roll ups of numbers, and trends on numbers. Risk is relationships, risk is connections, risk is propagation, risk is feedback. You have to be able to track the impacts across chains that span entities, geography, and time.

The risk application must natively support graphs, graph algorithms, and graph analytics. It must be able to count the number of impacted nodes up and down a BoM, multiple BoMs, a chain, and multiple chains. From this, it must be able to calculate an impact of a delay, a shortage, and a catastrophic failure based on BoM requirements, production times, costs, and margins.
Multi-level Metrics and Trend Analysis Even though graph analytics is key for supply chain risk analysis, good old fashioned metrics and KPIs are still key for analyzing risk potential at a point in time, and over time based on changes (and comparison to past trends that have led to risk and failure). For example, an increase in delivery times in every shipment, decreasing raw material supplies going into a source supplier that provides a refined version of that raw material, increasing failure in key components, etc. all indicate increased risk.

The application must support the definition of metrics based on arbitrary formulas, roll ups, and drill downs. It should also support basic trend analysis, allowing for comparison between time periods, similar trends, and historical trends of interest. it should also be capable of projecting the trend for an arbitrary time period in the future based upon the current trend progression and the most likely continuation based upon correlation with similar and historical trends.
Real-time Data Monitoring & Automation The application needs to integrate with third party data feeds, get (near) real-time updates, update all of the metrics the data relates to, monitor the changes against alerts, update the trends, and determine if any updates indicate trends of interest, significance, or concern. This all needs to happen automatically.

The application must support an open API, support standard data formats, be aware of standard data records used in direct supply chain, integrate with third party data feeds for all types of supply chain (risk) data out of the box, and be able to normalize all of this data into a standard data store (warehouse, lake, lakehouse, etc.). It must support rules-based alerts, integrations, monitors, and workflows to allow for appropriate automation support.
Mitigation Plans The platform must support the definition of mitigation plans, with individual actions, objectives, and impacts. Mitigation plans should support multiple stages, actions should support detailed definitions and expected outcomes, objectives should support a metric-based definition, and impacts should support detailed cost definitions.

It should be easy to instantiate an instance of a plan when a risk event is detected or defined by a user, track updates in real time as new data comes in or users define new data, track the impact of a recovery action (if it decreases the time to recovery, etc.), and auto-generate progress reports on a regular basis, as well as roll up all of the impacts, and recoveries, for users who need it. It should also support the creation of what-if scenarios to calculate the potential impacts of a potential action (in a given timeframe), and allow for cost vs impact vs margin/profit improvement calculations to help an organization determine if the action could be worth it, especially if the associated chance of success is limited.
Surveys The platform also needs to support the creation of surveys that can be distributed to multiple parties up and down the chain to collect data for analysis purposes.

The surveys must be capable of collecting numeric, type-valued, and open-valued data, as required.

Marketing Don’t Get No Results …

Everyday the doctor sees yet another post in his feed on LinkedIn about how Marketing is not getting results in the current climate because of reason X, where reason X may or may not be relevant, and how marketing has to do something different to get a sale. And every week there’s yet another article like this one on Forbes that provides Nine Marketing Tips to Improve Business Sales that is supposed to solve all your Marketing problems, but actually doesn’t. Why is that?

Well, let’s start by examining the tips:

Foster Collaboration between Sales and Marketing … well, duh! If you’re not doing that, you’re so clueless that you shouldn’t even be trying to market.

Design Your Goals with a Customer Focus … well, duh! If you’re not marketing to your customers, then you’re not going to get any business from them.

Regularly Review and Adjust to Ensure Alignment and Growth … well, talk about generic. This goes true for all departments in all businesses because the market is always changing. There are annual, and in some fast moving industries, quarterly reviews for a reason … it’s not just for determining how well you did, but how well what you are doing is suited to the market.

Begin with a Competitive Analysis … finally something not completely obvious! You’re going to have competition (because if you don’t, you don’t have a business), so if you want to outsell your competitors, you need to offer something better for a segment of the market, and that means understanding what you do different, better, or more cost effective.

Develop a Content Strategy on Digital Channels … back to the duh! Most buyers are online and don’t look at flyers, watch TV, or even listen to traditional radio … if you’re not digital, then unless you’re selling only to the soon-to-be-extinct old-retirees who don’t use tech, you’re not selling at all.

Gather Customer Feedback … more duh! You should do your best to get insight from them as to what they like, don’t like, and want.

Understand your Team Members’ Capabilities … finally something else not completely obvious or generic. Not just that they did X, but precisely what X was; how they did it; what industries and markets they did it in; what channels they did it on; what results they got; and where their expertise truly lies. That goes beyond a simple resume and a few questions.

Be Consistent and Persistent with Outreach … again, not completely obvious, but mostly since every market says persistence, but not all focus on the consistency. Brands aren’t built overnight.

Target High-Value Accounts with Personalized Campaigns … and a third thing not completely obvious or generic. You will be selling to multiple demographics and buyers, though not necessarily penetrating each demographic to the same degree, whether you realize it or not. And some of those buyers will be high-value (regular customers and/or regular purchasers of your most profitable products). Those are the ones you really want to return to you.

In other words, the tips are usually not that great. (And while batting .333 in baseball is great, batting .333 as a leading authoritative business source that is supposed to provide leading advice is not very good. Not very good at all!) And while we picked on Forbes (because it’s a super big publication that can take it), the Forbes article was actually one of the better ones … most of the articles are recycled obvious generic advice (likely regurgitated by ChatGPT cheaters) that are so bad the doctor could not write about them without interjecting so many profanities that he’s sure your spam blocker would ban it!

And, even worse, the good tips are usually focussed on engagement or sales. And while you might think those are the metrics that count, engagement doesn’t necessarily mean sales and sales doesn’t necessarily mean profit or results.

Revenue on its own is not results. Results are profit, and, more specifically, increases in profit over time (and if you think the shareholders give a damn about anything else, you’re dreaming). Profit requires selling the products and/or services that are profitable for the organization over time — those with a good margin now, a low return rate, and a low repair/support cost. And profit increase means selling more products that are highly profitable, which may mean shifting demand from one product to another or even altering the primary product/service offerings over time.

And how does Marketing figure this out and get results? The answer should be clear by now, but if it’s not, the answer is work with Procurement as well as Sales. Make sure that it understands the profit of each product over time, the ability of the organization to maintain supply and scale up, and alternatives that may be more profitable, sustainable, or stable that it should shift customer demand to over time.

But have you ever seen a major publication say this? Probably not. But Marketing (and Sales) will never peak without Procurement support.

SaaS is everywhere. Are you SaaSy?

Back in our 39 Part Series to Help You Figure Out Where to Start with Source-to-Pay in part 13 we gave you some vendors to shop around to the rest of your organization if you thought you can’t touch the sacred cows of Legal, Marketing, and, new-to-the-sacred-cow-list, the SaaS used in other organizational departments.

While the management of SaaS spend was not that important in the early days, and even only moderately important near the end of the last decade, it’s become critical since COVID (when everyone had to go on-line) as software spending has now become the third largest expense for many organizations after employees and office costs (that many organizations, who realized that employees don’t have to be in an office everyday to do office tasks and who don’t feel the need to force people to go back to buff the egos of the micromanagers who have no useful skillset and feel they need to micromanage to add value, are now trying to minimize, even to the tune of paying huge penalties to reduce office space).

A recent article in the FinTech Times really puts this into perspective. Summarizing the EagleEye SaaS Spend Report (2023), which analyzed over 400M worth of SaaS transactions, recently released by CloudEagle, the article noted that companies spend an average of $1,000 to $3,500 per employee on SaaS, while smaller companies, with less than 100 employees, spending (up to) 1M annually (on 50 to 70 apps) and mid-size organizations, of up to 5,000 employees, spending up to 100M annually on 300 to 400 apps! OUCH!

The article also noted that the highest departmental spenders were Engineering (45%), Marketing (19%), Sales (17%), Finance (7%), Customer Success (7%), and HR (5%). (Note there is no Procurement in this list, and that any apps are obviously classified as finance or Engineering [which includes cloud providers], which is sad.) Engineering/IT makes sense, it supports the entire organization, but that’s a pretty high percentage for Marketing and Sales. However, it makes more sense when it notes that, in terms of the number of applications used, marketing leads with 76 and sales is third with 42. Why? (The answer: because there is no central management or strategy, there are multiple tools doing almost the same thing, and it’s just total chaos in those departments.)

Obviously, it is becoming vital to scrutinise how their software budgets are allocated and ensure every dollar spent returns a significant value, and the article gets it right when it notes this, and while it should be on the radar of every CFO and CIO to get this spending under control, the article really misses the mark when it doesn’t mention the CPO — who is probably best positioned to help the organization come up with a sound spending strategy, as it not only puts every purchase it makes under the microscope, but gets put under the microscope for every purchase it makes (as most organizations still see it as a cost center despite the enormous value it brings by containing costs under chaotic cadences of the markets it has to buy in).

Furthermore, the first step is to get a true understanding of SaaS spend across the organization, which is likely buried on P-Cards to hide just how much rampant, off-contract, off-protocol spend there is. To this end, we do recommend engaging an expert SaaS Analytics firm which has pricing benchmarks on the most commonly used SaaS applications across the major areas (IT/Engineering, Marketing, Sales, Finance, and HR) to help identify all the SaaS spending and the best opportunities for cost reduction through termination of under/un-utilized licenses, consolidation to one provider for a specific function, and re-negotiation. Most mid-size or larger organizations that do this the first time will identify almost 30% of cost savings opportunity, which can typically be fully materialized within two years (given typical contract lengths and how long it takes to make all the migrations).

And while the doctor can’t say which firm is likely the best for you without a consultation, he can say that many of the firms on that list can do a do a good job and you should quickly be able to zoom in on the top two or three for you with an RFP and a few phone calls. Basically, you’re looking for a company that’s in your region, has analyzed the SaaS spend of a number of companies in your industry, has good spend analytics technology, and benchmarks on the major player that you feel comfortable working with. (And has really good spend analysis. Yes, we said it twice. Because it is important.) Since you don’t have to enter into a subscription for an initial project, you can easily get started because if the company is not the best for you, you’ll still get value and can redo the project with a different company in a year or two. There’s no reason not to do it and you’re guaranteed to identify savings. So why not Get SaaSy, now, get SaaSy!

“Ooh, the way that you spend it
Makes me go crazy, show me you can end it
You could be saving more
Ooh, the way that you buy
Makes me go crazy, show you I can end it
You could be saving more

Much more
Much more
Much more

Get SaaSy, now, get SaaSy
Get SaaSy, now, get SaaSy
Get SaaSy, now, get SaaSy

Savings
Now (much more) …”

Top 10 words or phrases to ban from an RFP response, Part 1

In this two-part article we are going to give you the top 10 words or phrases you should ban from RFP responses if you want a meaningful response to your technology / technology-backed / technology assisted RFP that’s not full of meaningless buzzwords, ambiguity, misdirection, or some combination thereof. The simple fact of the matter is that if you allow any of these phrases, you are not getting an answer, or at least not an answer you need.

10. Savings

Let’s get straight to the point. “Savings” do not exist. Cost avoidance does exist, but if a sourcing event identifies “savings”, it doesn’t mean that you negotiated savings, it meant that you were overspending and that the event identified that overspend so you could make changes to your Procurement to prevent that overspend. That’s it. Savings is money the business accumulates over time. The other definition is finding a way to truly reduce the amount of time, material, or resources to make something — which is something that is up to your supplier to figure out, not you. Your job is to buy at the lowest cost + margin the vendor/service provider will sell for and avoid overspend. The only “savings” you can realize is in the amount of time a process takes (which is why you buy appropriate software platforms to minimize your effort) or the amount of resources a product takes (with a better design). That’s true savings.

9. Market Intelligence

This one absolutely drives the doctor crazy and it should drive you crazy too. WTF is “market intelligence”. The market is not intelligent. In fact, ever since the introduction of Reaganomics, predicated on the false belief that a rising tide floats all boats (as discussed in Why America Abandoned the Greatest Economy in History), one could argue that the market has become decidedly unintelligent (at the same time that American IQ’s have dropped as per a recent article on The Hill, which, of course, we all blame on X).

Now, they may promise better insight into market pricing (but what is that, especially if you can just buy a real-time data feed to commodity indices or public sector contract prices), market dynamics (but isn’t that just buy and sell data), inflation or cost changes (but that requires good predictive analytics, do they have that technology and do they know how to use it), and so on, but only true experts can really provide insight that is likely to come true. And do they have those experts? And what’s their historical accuracy? Most firms don’t have leading experts in the top 10%. Basic math says only 1 / 10 “experts” are in the top 10% and only 1 / 10 companies offering a “market intelligence” service are in the top 10. So ask exactly what information/advice they provide you, how they provide it, how often they update it, who in particular does any manual predictions, and so on.

8. Diversity

Diversity is important. It’s very important. It’s absolutely necessary if you need a supplier to come up with innovative solutions to a problem. But simply allowing a supplier to say they are diverse or check a “diversity” box doesn’t tell you anything. First of all, what’s their definition of diverse. One white woman on a board that otherwise is entirely composed of greedy old white men? Might make their definition of diverse, but definitely, definitely, definitely wouldn’t make the doctor‘s definition of diversity.

True diversity is men and women of all ethnicities, experiential backgrounds, educational backgrounds, and so on that are available to you in the areas in which you employ people. Especially those from diverse backgrounds divergent from your founders / management. And it’s not an arbitrary target, it’s representative of the average diversity in your area. As we have said before, saying you want 50% women in an IT or Engineering company when only 25% of graduates are women is not achievable (but 25% is).

7. Green Procurement

What does “green procurement” mean. the doctor bets you have a definition. And the doctor bets its probably bull crap. Not to say that your intentions, or goals, are bad, or that what you think it is is bad, but that how a less than scrupulous supplier will respond to it is bad. Because when it comes to “green”, there is an awful lot of “greenwashing”, “greenlighting”, “greenrinsing”, “greenhushing”, “greenshifting”, “greencrowding”, or other decidely ungreen practices out there, and if you’re not careful, a supplier will sell you one of these not-so-green services when you ask for a “green” solution. (And, in fact, you’d be greener if you simply asked Kermit the Frog to buy you some lettuce from the local farm. After all, no one knows better than Kermit that It’s Not Easy Being Green.)

6. Sustainable Procurement

What does this mean? It’s even more ambiguous than “green procurement”. Does it mean that what you are buying is sustainable, or does it mean that the process is sustainable. Technically, under the rules of English Grammar (you know, that system of language rules they don’t seem to teach anymore), “sustainable” is an adjective to the “procurement” noun that follows, so as long as the vendor/service provider supports your Procurement process in a way that is sustainable to you, they’ve technically met the requirement, right? Right! But what you want is sustainable goods and services, but that’s not technically what you asked and the sneaky slippery suppliers will try to use that ambiguity to give an ambiguous response and slip a bid in that you shouldn’t consider. So again, don’t ask if they have sustainable procurement, ask what efforts they make to use renewables, minimize resource (water, energy, non-renewable material) use, ensure their suppliers are using sustainable practices and financially sound, and so on.

In other words, buzzwords are not answers, and any provider that simply spews slang at you is not solving serious situations that are relevant to your business. So ban the buzzwords, get deep insight, and make the right decisions.

Of course, since we started at 10, these aren’t the worst of the buzzwords. Not the worst by far! In our next part, we’ll review the top 5. Stay tuned.