Monthly Archives: January 2024

Does Your Procurement Process Take Too Long, Maybe You Need to Zip Through It!

Zip is an interesting player. Started in 2020 to innovate the (lack of) intake in the Procurement world, they managed, through sheer ease of use and organizational friendliness, to embed themselves in a number of large organizations, get major investor attention, and, in less than four years, catapult themselves to a unicorn valuation.

However, as a result of those investments, they’ve been hiring good engineers as fast as they can find them, beefing up the orchestration, extending the product footprint (with baseline source-to-contract as well as some procure-to-pay capability), and launching a new integration platform, which is essential for source-to-pay-plus orchestration. They are making quite rapid progress in a space where many (but not all) larger companies have considerably slowed in their introduction of new innovation.

Marketing itself as procurement orchestration, Zip was founded to address the facts that:

  • purchasing is now distributed across numerous departments, and individuals, in today’s organizations,
  • (significantly) more cross functional approvals are required to control cost and risk, and
  • the ERP is not enough, and the plethora of apps and systems a modern organization needs are disconnected.

Now that they have powerful workflow creation capability, integration capability, and overall orchestration capability that can enable whatever you have (including Workday, Ariba, and Coupa), they now address the core problems they were formed to solve.

With the Zip platform, you can:

  • connect all individuals who need to purchase with all departments that need to be involved and vice-versa,
  • integrate all of the departments that need to review and approve purchasing (related) decisions, and
  • get visibility into each stage of the process across ALL of the organization’s systems (and even complete some tasks in the Zip platform where it has the corresponding Source-to-Pay capability).

On top of this you can:

  • integrate third party data feeds as well as applications to get insights and power analytics you need at any step of the process,
  • run cross-platform reports across performance and timelines as well as all spend, risk, and related data in the system,
  • manage your vendors and their data (which could be spread across a dozen systems) from one central viewpoint, and
  • manage your organizations (and subsidiaries) by department, category, etc.

The two-fold reason that you can do all this is because the Zip platform is really good at:

  • workflow management and
  • platform, and most importantly, data integration.

We’ll start with workflow management.

In the Zip platform, workflows are incredibly customizable. Workflows can:

  • have as many steps as required
  • which can be defined as sequential or parallel … and the workflow will not advance until all parallel steps are completed
  • have as many states as is needed (though most will only need a few states: locked, ready, in progress, approved, rejected (and sent back), rejected [and process terminated], etc.)
  • have as many sub-tasks and/or associated approvers as needed (so if the Legal Review needs two sign offs due to different policies that have to be met or the Finance Review needs two sign offs to ensure transparency, no problem)
  • have as many conditions as necessary for workflow selection / triggering (so you can have different procurement workflows by sub-category by geography if need be)
  • have as many triggers and dynamic data pulls defined as needed to instantiate a step once unlocked (e.g. bring up all vendors associated with a product, all approvers associated with a role, etc.)
  • link to as many external systems as required, with each (sub)task associated with the app/system in which the integrated party may perform his or her task
  • have as many details and associated documents as necessary
  • for Procurement, link to associated products, vendors, and / or contracts
  • etc.

And this is why the Zip Platform is so easy to use by, and attractive to, the average purchaser / requisitioner in an organization.

When an average user wants to buy, all they have to do is

  1. log into Zip via SSO (which can be configured to orchestrate organizational workflows beyond Procurement),
  2. indicate they want to purchase something
  3. select what they want to purchase
  4. make a few category/specification sub-selections to help the platform narrow in to the appropriate workflow (e.g. Facility Services, Janitorial; Computing and Electronics, Laptop;)
  5. if there are pre-approved vendors and/or products, the vendors/products; if not, they can select their own vendors/products
  6. answer a few [sub]-category dependent associated questions on the contract type, corporate or personal data that will be shared, etc.
  7. indicate the budget (amount) they wish to use (if appropriate)
  8. and submit the request …

The process is kicked off, the requisite data / document / survey collection is begun, those involved in the process are notified (and have visibility into the tasks they (potentially) have (coming), and the requester has full visibility into where the process is at all times (as the system will synch with external systems on predefined intervals between 15 minutes and 24 hours, usually depending on how often the external systems are used and what restrictions there are on access [e.g. some systems don’t have an API and do daily exports, and for systems with real-time APIs, the user can force synch anytime they want). But, most importantly, events that used to take hours to create and weeks to coordinate, can be created in minutes and the coordination effort is non-existent — the system handles everything for you.

When a user logs in, they can go to their (task) dashboard and see all the projects they are involved in, all the tasks they are assigned in those projects, and drill into all of the open tasks they need to work on now. They can also see how long the task has been open, when it is/was due, the average time taken on a task of that type, and the average time the user takes to do the task (if they drill into the appropriate report).

Moreover, if vendors are involved, vendors are invited and taken to their own portal where they see the event and only see what additional information is required (as anything requested upon onboarding is already available.

It’s also very easy to setup and administer, which is also critical for a modern platform. At any time, a user with appropriate authority can:

  • define, modify, and even inactivate workflows, as appropriate using a very easy to use no-code workflow builder where the users visually define the steps; select the actions; define the rules, actions, and triggers, etc.
  • define or modify (approval) statuses
  • define or modify the organization’s category hierarchy
  • define or modify new or existing survey templates which allow the user to add sections, questions, selection lists, etc.
  • create new system fields and documents and associate them with the appropriate system objects
  • create or modify the lookup types
  • add or modify user access rights, down to geographies, departments, workflows, function access rights
  • define or modify the organizational hierarchy (subsidiaries, departments, queues, locations, GL entities)
  • define roles, users, and permissions
  • define bank accounts and vendor (virtual) cards
  • add (out-of-the-box) or modify integrations, or launch the new low-code Zip Integration Platform that allows customers to build their own connector to any system with an Open (REST) API
  • define the default reports (vendor, spend, performance, etc.)

While we’re not covering them in this post, we should note that Zip has a P2P module (that 42% of its customers use) and a new Sourcing Module, and that Zip is actively working on new capabilities and module(s).

The new capabilities we can discuss now, on the Q1/Q2 roadmap, are:

  • NLP-based intake for even easier usability and up-front integration of Slack, Teams, and other collaboration platforms to allow workflows to be kicked off in those platforms
  • predictive analytics — the analytics module is being upgraded and it will include recommendations for spend management and process improvement using trend analysis, machine learning, and other techniques that can be used to provide the user with additional insight

In other words, Zip, which has well over 300 enterprise customers, is zipping along and intends to keep doing so. The great thing is that you don’t need to replace any of your enterprise systems, including any best of breed systems you have for sourcing or procurement, but instead connect them together to maximize the value you get out of them. Zip is an(other) I20 — intake to orchestrate — system that is certainly worth being aware of and checking out if system, process, or stakeholder orchestration and collaboration is a challenge in your enterprise.

The Prophet‘s 2024 Procurement Prediction Number 2

DEI Discrimination Dies in the Supply Chain B+

According to The Prophet, this will be the year DEI dies in the top-performing Supply Chain and Procurement Departments as a result of

  1. corporate abandonment (as a result of / prevention for lawsuits) and/or
  2. a desire for better performance.

However, these agendas were put in place by companies that wanted to

  1. have a politically correct reason to hire certain groups/individuals (who may not be deserving of the role when all other considerations [education, experience, ethics, etc.] are otherwise equal),
  2. have a politically correction reason to discriminate against certain minorities who were not classified as a recognized minority (especially religious minority — if you define minority by race, it often becomes easy to discriminate against certain religions), or
  3. target a market that likes a “diversity” brand
    and focus their marketing around their diversity efforts; where these marketing efforts worked, they are doubling down on that marketing — and their efforts to maintain diversity “in the supply base”.

So while many companies will silently abandon DEI in their own four walls (to deal with / prevent lawsuits and increase performance), they will double down on their DEI requirement for their suppliers. And this, as has been noted, can be extremely problematic.

Not only is it setting your suppliers up for the same problems as they succumb to mandates from big US and EU customers to diversify or die, especially in countries that are slowly catching up on anti-discrimination laws, but it’s setting them up for different problems as well.

First of all, if they’re so dependent on DEI-mandating customers that they have to fill quotas, they definitely don’t have the bank account to survive even a big government fine, yet alone a lawsuit. Secondly, if they are staffing up will less competent workers in a jurisdiction where the average worker is likely less educated and experienced in modern processes and technology as it is (as it wouldn’t be a low-cost country otherwise, which is where big US and EU companies still predominantly source from), they may not have enough competence to make the reliable, environmentally friendly, and safe products you need, with a big emphasis on safety. Reliability problems will just cost you a big repair bill or the cost of a replacement, but safety problems where an unsafe product results in permanent disability or death will cost you a massive lawsuit.

Moreover, you can’t just eliminate all suppliers that might be going overboard on DEI when your options are limited, because chances are they are all serving bigger customers than you whose business they rely on. If there’s only half a dozen factories that can make your stuff, what do you do?

You will need to spend time educating your suppliers on what DEI is supposed to be (and not how it’s being implemented in America and other countries that are misusing it). That it’s not arbitrary mandates or quotas, it’s non-discrimination and equal chances for all. That no applicant is turned away based on race, religion, etc.; that all of the best applicants from an education and experience get an interview, and that, if there truly are 2 or 3 candidates with equal education, experience, ethics and overall ability to do the job, only then will the minority/diversity factor enter the equation in the award of the job.

You will also need to favour suppliers who don’t set arbitrary quotas, especially ill-informed ones around some hypothetical, non-realistic, idea of equality. For example, 50% women in STEM jobs in many countries is just not realizable. When only 20% to 25% of graduates in STEM are women, you’re not going to get a 1:1 ratio; and if you do, then a lot of companies are not going to be at the 3:1 ratio they should be at, which is going to lead to even more women spurning STEM when they see the all male work places that result when companies with deeper pockets hire all the women and prevent them from hiring any. It’s not quotas. It’s not arbitrary definitions of racial or religious minority. It’s who do you have and who don’t you have. If you’re 75% old white male, guess what?, you need women, youth and people who aren’t white for diversity. And if you’re 75% young black female, which is very possible in many African countries, then you probably want some older individuals who are not women and not black (but not necessarily white, remember, all races, religions, and colours should be equally considered). That’s the tie-breaker at the end of the day — what you’re missing. But ONLY when all other things are equal.

Now, when the intolerant tolerant like to define arbitrary buckets, it will be hard to get this message across, but you have to educate, explain, and persevere — or else your suppliers’ DEI will be your downfall.

COUPA: Centralized Optimization Underlies Procurement Adoption …

… or at least that’s what it SHOULD stand for. Why? Well, besides the fact that optimization is only one of two advanced sourcing & procurement technologies that have proven to deliver year-over-year cost avoidance (“savings”) of 10% or more (which becomes critical in an inflationary economy because while there are no more savings, negating the need for a 10% increase still allows your organization to maintain costs and outperform your competitors), it’s the only technology that can meet today’s sourcing needs!

COVID finally proved what the doctor and a select few other leading analysts and visionaries have been telling you for over a decade — that your supply chain was overextended and fraught with unnecessary risk and cost (and carbon), and that you needed to start near-sourcing/home-sourcing as soon as possible in order to mitigate risk. Plus, it’s also extremely difficult to comply with human rights acts (which mandate no forced or slave labour in the supply chain), such as the UK Modern Slavery Act, California Supply Chains Act, and the German Supply Chain Act if your supply chain is spread globally and has too many (unnecessary) tiers. (And, to top it off, now you have to track and manage your scope 1, 2, and 3 carbon in a supply chain you can barely manage.)

And, guess what, you can’t solve these problems just with:

  • supplier onboarding tools — you can’t just say “no China suppliers” when you’ve never used suppliers outside of China, the suppliers you have vetted can’t be counted on to deliver 100% of the inventory you need, or they are all clustered in the same province/state in one country
  • third party risk management — and just eliminate any supplier which has a risk score above a threshold, because sometimes that will eliminate all, or all but one, supplier
  • third party carbon calculators — because they are usually based on third party carbon emission data provided by research institutions that simply produce averages for a region / category of products (and might over estimate or under estimate the carbon produced by the entire supply base)
  • or even all three … because you will have to migrate out of China slowly, accept some risk, and work on reducing carbon over time

You can only solve these problems if you can balance all forms of risk vs cost vs carbon. And there’s only one tool that can do this. Strategic Sourcing Decision Optimization (SSDO), and when it comes to this, Coupa has the most powerful platform. Built on TESS 6 — Trade Extensions Strategic Sourcing — that Coupa acquired in 2017, the Coupa Sourcing Optimization (CSO) platform is one of the few platforms in the world that can do this. Plus, it can be pre-configured out-of-the-box for your sourcing professionals with all of the required capabilities and data already integrated*. And it may be alone from this perspective (as the other leading optimization solutions are either integrated with smaller platforms or platforms with less partners). (*The purchase of additional services from Coupa or Partners may be required.)

So why is it one of the few platforms that can do this? We’ll get to that, but first we have to cover what the platform does, and more specifically, what’s new since our last major coverage in 2016 on SI (and in 2018 and 2019 on Spend Matters, where the doctor was part of the entire SM Analyst team that created the 3-part in-depth Coupa review, but, as previously noted, the site migration dropped co-authors for many articles).

As per previous articles over the past fifteen years, you already know that:

So now all we have to focus on are the recent improvements around:

  • “smart scenarios” that can be templated and cross-linked from integrated scenario-aware help-guides
  • “Plain English” constraint creation (that allows average buyers & executives to create advanced scenarios)
  • fact-sheet auto-generation from spreadsheets, API calls, and other third-party data sources;
    including data identification, formula derivation and auto-validation pre-import
  • bid insights
  • risk-aware functionality

“Smart Events”

Optimization events can be created from event templates that can themselves be created from completed events. A template can be populated with as little, or as much as the user wants … all the way from simply defining an RFX Survey, factsheet, and a baseline scenario to a complete copy of the event with “last bid” pricing and definitions of every single scenario created by the buyer. Also, templates can be edited at any time and can define specific baseline pricing, last price paid by procurement, last price in a pre-defined fact-sheet that can sit above the event, and so on. Fixed supplier lists, all qualified suppliers that supply a product, all qualified suppliers in an area, no suppliers (and the user pulls from recommended) and so on. In addition to predefining a suite of scenarios that can be run once all the data is populated, the buyer can also define a suite of default reports to be run, and even emailed out, upon scenario completion. This is in addition to workflow automation that can step the buyer through the RFX, auto-respond to suppliers when responses are incomplete or not acceptable, spreadsheets or documents uploaded with hacked/cracked security, and so on. The Coupa philosophy is that optimization-backed events should be as easy as any other event in the system, and the system can be configured so they literally are.

Also, as indicated above, the help guides are smart. When you select a help article on how to do something, it takes you to the right place on the right screen while keeping you in the event. Some products have help guides that are pretty dumb and just take you to the main screen, not to the right field on the right sub-screen, if they even link into the product at all!

“Plain English” Constraint Creation

Even though the vast majority of constraints, mathematically, fall into three/four primary categories — capacity/allocation, risk mitigation, and qualitative — that isn’t obvious to the average buyer without an optimization, analytical, or mathematical background. So Coupa has spent a lot of time working with buyers asking them what they want, listening to their answers and the terminology they use, and created over 100 “plain english” constraint templates that break down into 10 primary categories (allocation, costs, discount, incumbent, numeric limitations, post-processing, redefinition, reject, scenario reference, and collection sheets) as well as a subset of most commonly used constraints gathered into a a “common constraints” collection. For example, the Allocation Category allows for definition “by selection sheet”, “volume”, “alternative cost”, “bid priority”, “fixed divisions”, “favoured/penalized bids”, “incumbent allocations maintained”, etc. Then, when a buyer selects a constraint type, such as “divide allocations”, it will be asked to define the method (%, fixed amount), the division by (supplier, group, geography), and any other conditions (low risk suppliers if by geography). The definition forms are also smart and respond to each, sequential, choice appropriately.

Fantastic Fact Sheets

Fact Sheets can be auto-generated from uploaded spreadsheets (as their platform will automatically detect the data elements (columns), types (text, math, fixed response set, calculation), mappings to internal system / RFX elements), and records — as well as detecting when rows / values are invalid and allow the user to determine what to do when invalid rows/values are detected. Also, if the match is not high certainty, the fact-sheet processor will indicate the user needs to manually define and the user can, of course, override all of the default mappings — and even choose to load only part of the data. These spreadsheets can live in an event or live above the event and be used by multiple events (so that company defined currency conversions, freight quotes for the month, standard warehouse costs, etc. can be used across events).

But even better, Fact Sheets can be configured to automatically pull data in from other modules in the Coupa suite and from APIs the customer has access to, which will pull in up to date information every time they are instantiated.

Bid Insights

Coupa is a big company with a lot of customers and a lot of data. A LOT of data! Not only in terms of prices its customers are paying in their procurement of products and services, but in terms of what suppliers are bidding. This provides huge insight into current marketing pricing in commonly sourced categories, including, and especially, Freight! Starting with freight, Coupa is rolling out a new bid pricing insights for freight where a user can select the source, the destination, the type (frozen/wet/dry/etc), and size (e.g. for ocean freight, the source and destination country, which defaults to container, and the container size/type combo and get the quote range over the past month/quarter/year).

Risk Aware Functionality

The Coupa approach to risk is that you should be risk-aware (to the extent the platform can make you risk aware) with every step you take, so risk data is available across the platform — and all of that risk data can be integrated into an optimization project and scenarios to reject, limit, or balance any risk of interest in the award recommendations.

And when you combine the new capabilities for

  • “smart” events
  • API-enabled fact sheets
  • risk-aware functionality

that’s how Coupa is the first platform that literally can, with some configuration and API integration, allow you to balance third party risk, carbon, and cost simultaneously in your sourcing events — which is where you HAVE to mange risk, carbon, and cost if you want to have any impact at all on your indirect risk, carbon, and cost.

It’s not just 80% of cost that is locked in during design, it’s 80% of risk and carbon as well! And in indirect, you can’t do much about that. You can only do something about the next 20% of cost, risk and carbon that is locked in when you cut the contract. (And then, if you’re sourcing direct, before you finalize a design, you can run some optimization scenarios across design alternatives to gauge relative cost, carbon, and risk, and then select the best design for future sourcing.) So by allowing you to bring in all of the relevant data, you can finally get a grip on the risk and carbon associated with a potential award and balance appropriately.

In other words, this is the year for Optimization to take center stage in Coupa, and power the entire Source-to-Contract process. No other solution can balance these competing objectives. Thus, after 25 years, the time for sourcing optimization, which is still the best kept secret (and most powerful technology in S2P), has finally come! (And, it just might be the reason that more users in an organization adopt Coupa.)

Can you tell what’s wrong with this picture?

Bloomberg predicts Gen-AI will be a 1.3 Trillion market by 2032.

MarketResearch predicts the Procurement Software Market will be worth 17.6 Billion in 2032.

Give up? The answer is simple. ????????????????????????????????????????!

Every single business needs to procure. Every single procurement department in every single business is being crushed under the weight of compliance requirements, risk assessments, logistics delays, supply chain interruptions, auditability requirements, DEI requirements, quality requirements, budget constraints, etc.

???????????????????? ???????????????????????? ???????????????????????????????? ???????????????????? ???????????????????????? ???????????????????????????????????????????? ????????????????????????????????.

In comparison, ???????????? ???? ???????????????????????? ???????????????????????????????? ???????????????????? ????????????-????????!

Companies have survived just fine without it for thousands of years. There’s yet to be a single use case that provides value and does so reliably. (Maybe a few for specialty tailored LLMs, but not Open-AI Gen-AI.)

Seriously think about this!

The Prophet‘s 2024 Procurement Prediction Number 1

A Supply Chain Black Swan in 2024 A-

“A major terrorist (or asymmetric military) threat incident in 2024.”

Very likely. As well as:

  • one or more elections of a populist dictator-want-to-be in one or more significant “democratic” countries/blocs with an election this year (including the four largest: India, the European Union, the United States, and Indonesia) and/or insurrections when they lose.
  • significantly more unrest and attacks in the Red Sea and more slowdowns/shutdowns in the Panama Canal due to lack of rain/water (thanks to the US deciding to “fight back” and bomb Yemen)
  • scarcity of capacity due to longer transit times as ships have to navigate the dangerous capes (Agulhas and Horn)
  • unavailability of raw materials as a result of military actions in the Congo, increased sanctions on Russia, and increased crime or political unrest in Brazil (which are 3 of the top 5 countries with the most rare earth metals / reserves)
  • etc.

In other words, this is not the year we’re not going to see another black swan. This is the year we’re going to see a full flight of black swans! (Which is a sight we never hoped to see!)

As The Prophet has noted, you’re going to have to split your business and geographically diversify your supply base (down to the source), but with respect to the recommendation of “at least one supplier with localized production / inventory“, it’s not enough if it’s the 20 in a 60/20/20 and definitely not enough if it’s the 10 in a 80 / 10 / 10. You can’t always produce enough locally, which is why, as SI has been saying for almost a decade and a half, you need to nearshore (not just friend-shore). If you can’t get the majority of the products you need on a truck crossing friendly, or at least not unfriendly, borders, you’re at risk of a significant supply chain disruption.

The other recommendations are right on the money:

  • overweight supply chain risk and visibility investments, and remember they are not the same — you need supply chain visibility down to the source of every raw material as well as transportation visibility of all of your orders, including materials you source on behalf of suppliers/assemblers/distributors, from the source to your warehouses to your customers; these capabilities are generally not always found in the same solutions
  • hedge with additional safety stock/inventory — JIT (just in time) is great until it breaks; and with every single disruption, you always lose more than you save with JIT; and if demand is spike and trough, you can’t always ramp up and ramp down fast enough, so inventory is being built up somewhere … and is that somewhere best in an insecure manufacturer’s warehouse half a world away, or a secure warehouse close to your customer base when release day rolls around? (moreover, you always save more with good demand planning than trying to optimize JIT)
  • conduct scenario planning and war gaming exercises especially for critical products or services that could destroy your business
  • cross-train for strategic roles not just to remove risk of personnel departure or insufficient staff for an emergency scenario, but so you can create better strategies that are not only more sounds but easier for all parties to understand and implement
  • automate everything that can be automated by removing UNNECESSARY human touch-points … as noted, a lot of AP, AR, transactional procurement, and tail spend can be automated … including POs, invoice processing, repeat purchasing, but so can contract drafting, regular analysis, sourcing planning, inventory and demand forecasting adjustments, etc. … the key is to make sure checks and balances are in place before something is automated and if a spend amount is too high, an invoice doesn’t match a PO, something is removed in a contract draft, etc. one or more humans are included in the loop to deal with the exceptions (which cannot be auto-resolved — for example, if an invoice doesn’t match a PO, the system can auto-notify the supplier of the discrepancy, auto-suggest a correction for automatic acceptance, etc. but should not automatically accept an uncorrected discrepancy, no matter how small)
  • insure every new hire you make is someone you would trust to save the business

And, even more importantly, with respect to the last recommendation, make sure these new hires get all the training they need and tools they need to actually save the business when one or more of the black swans break formation and barrel dive towards your business!