Monthly Archives: October 2025

Why Your Tech Selection Should be KPI, and not Bell-and-Whistle, Focussed If You Are Not Technical! Part I

If you won’t admit your TQ (Technical Quotient) is rock-bottom, you won’t spend (or aren’t allowed to spend) budget on an outside expert focussed on Project Assurance, and decide to go ahead with selecting your own ProcureTech solution, then you should make a point to focus your selection around your best practice KPIs. First of all, your management will be happy if you improve against them. Secondly, some of the best KPIs actually require you to have good platforms in place if you are to improve against them.

To demonstrate this, we are going to take the 21 Key Performance Indicators (KPIs) for Procurement that Tanya Wade shared because they are a good starting point (as you don’t want too many KPIs as THE REVELATOR pointed out in his analysis). Today, we’re going to start with the first 8 (even though 8 is clearly not enough).

Cost Management

These KPIs will require you to have an e-Sourcing platform in place with good reporting, and/or a spend analysis platform in place with good category management (since, theoretically, if you like the extra work and headache, you can continue to source using e-mail and PDF/Excel templates and get good results if you are guided by a good category management solution and have a good analytics platform to compare the results).

   Cost Savings

You can’t compute, track, and present the cost savings KPI in real-time without an e-Sourcing solution with integrated reporting, or a modern spend analysis solution that updates the cube on every synch with the CLM and ePro system. Both improve your Sourcing focus!

   Cost Avoidance

This requires understanding the current market price vs. the price negotiated, which might be higher than the previous price. If the price paid under the last contract was $1.00 per unit, the current market price, due to supply shortages, is $1.30, but you negotiate $1.15 per unit, you have a cost avoidance of $0.15 per unit, which can be substantial if you need 100,000 units and would have to pay market price without a contract. Without a spend analysis solution that can pull in these market prices and your negotiated prices, it’s very hard to show the cost avoidance your team secures.

   Spend Under Management

This requires a top notch spend analysis system that can suck in all organizational spend across systems, categorize it against a sufficiently defined taxonomy, link each category that is under contract to the associated contract, and then compute spend under management vs. spend available to be managed vs. all organizational spend.

Supplier Performance

These KPIs will require you to have a good supplier management system in place that goes beyond simple onboarding and relationship management system (which even the suites have, even if clumsy), and allows you to truly track supplier performance and supplier ratings.

   Supplier Lead Time

In order to track supplier lead time, you need a good e-Procurement platform that tracks the lead time promised in sourcing, the date the order was placed, and the date the goods receipt was logged in the system. This way, you can track the average lead time across all orders as well as against the promise, and if the supplier is not meeting the promise, you know you need to order earlier and kick off a supplier development project.

   On-time Delivery

You need a good e-Procurement system to track both the delivery date vs. the expected delivery date based on the lead time, but the delivery date vs. the promised delivery date in the acknowledgement, because if a supplier indicates they need extra time for a larger than anticipated order, and you don’t cancel, they are on time if they meet the promised delivery date.

   Supplier Fill Rate

You need a good e-Procurement system to compare the order to the goods receipt to track the fill rate over time. This is critical because if the supplier keeps underdelivering, you risk costly stock-outs, which become more costly if they shut down production lines in a manufacturing or cause customers to start shopping at a competitor’s (online) storefront because the competitor actually has the stock they promise.

   Supplier Defect Rate

You need a good e-Procurement system or a good Supplier Management System to track the number of defects and compare that to the fill rate to track the defect rate, which is very critical, especially if you have SLAs that you are depending on when you make your orders (as a higher than allowed for defect rate could result in stockouts and even expensive production line shutdowns).

   Supplier Rating

This requires a top notch supplier performance management solution (which is a small fraction of the supplier management platforms); a top notch spend analysis system that allows you to build and analyze performance, compliance, and risk cubes; or a top notch SXM+/TP(R/C)M solution that allows you to build Supplier 360 ratings, which is critical to understanding how well your supply base is serving you and how well you are supporting your supply base.

Come back tomorrow for the next set of KPIs that Tanya states you need to address and how they will help you select solutions that might actually realize value for your Procurement organization.

What is a Strategic Supplier Relationship?

Simple question. Sophisticated answer.

This was posed by THE REVELATOR in a recent LinkedIn article referencing his recent post on Procurement Insights’ Influence on Walmart’s Supplier Management Transformation.

First of all, the supplier has to be strategic.

For it to be strategic, it should be a supplier that is strategically selected, strategically engaged, strategically developed, and strategically managed. The goal of all of this should be to identify, build, and maintain a stellar supplier, as per a series we did here on how do you identify a truly stellar supplier.

But it’s more than that. Because strategic is more than just identifying long-term aims and interests and the means of achieving them, it’s execution. And when two parties are involved, its execution on both sides.

This means that it’s also critical that you are a strategic customer for the supplier. And while it’s hard to completely define what that is, as every supplier could have their own definition, at a minimum, just like a supplier should be stellar for you, you should be a customer of choice for the supplier, a topic we’ve also covered in the past.

But that’s not enough, because you can classify a supplier who supplies high-volume components as strategic with stellar service based on a set of KPIs, and the supplier can classify you as strategic based upon spend threshold and the fact that you always pay your invoices on time, and there can be nothing strategic about the relationship.

Unless there is active collaboration, a mutual commitment to mutual development, a shared goal along strategic objectives, and trust, there is nothing strategic about it and the relationship will fall apart the minute a major disruption or event occurs such as a supply shortage two or more tiers down in the supply chain that forces a supplier to choose which customers get their orders and which don’t (because it cannot fulfill all its contracts due to a force majeure event), or a sudden bankruptcy from your customer that forces you to cancel a big order (which will result in them not bidding/accepting further business from you).

For a relationship to truly be strategic, there has to be regular communication and collaboration on the shared goal of supporting the upstream supply chain of your current and potential customers utilizing the same values (sustainability, quality, performance, etc.) and a commitment to work together to solve problems when the going gets unexpectedly (and almost catastrophically) tough. When there is a shortage of a critical material, you will get your supply first, or if that’s not possible, the supplier will work with you to design an alternative (that uses a different raw material) or find alternate sources. When your biggest customer goes belly-up bankrupt, you will work with them to find additional, substitute, business you can give them to maintain the relationship and the business until you find a replacement customer.

Strategic means dependable, and that the dependability is both ways.

Procurement And Supply Chain are Drowning in Wannabes

We see it daily on LinkedIn.

Twenty-something founders on LinkedIn claiming their Configurable Agentic Gen-AI Enhanced Systems (CAGES) (with marketing messaging coming straight from the A.S.S.H.O.L.E.) will solve all your problems, although they don’t have a clue what those problems really are, and even if you told them, they wouldn’t have a clue themselves how to solve your problems because they have no real knowledge of, or experience with, Procurement or Supply Chain.

New-Age Influencers barely out of college giving themselves nicknames like the Supply Chain Sovereign or Sourcing Sorcerer and promising you best practices and deep insights in your daily email but who have never stepped foot outside of the big consultancy and don’t know anything beyond the 7 year old playbook they were given.

Advertisements from the Big X Consultancies or “Next-Gen Analyst/Services Firm” promising to replace your workforce with AI Agents, despite the 95% failure rate (as only 5% of AI projects have led to a return, which is 2.5 times worse than a traditional technology project, where a whopping 12% are now delivering a return), and somehow do so cheaper (despite the soon to be exponentially rising costs of LLMs as compute costs go through the roof due to a lack of energy to power them and water to cool them).

As so astutely pointed out by Mr. Koray Köse’s in his recent article on how our supply chains are literally drowning in wannabes who mistake theory for expertise, when the gap between their theory and reality could never be wider!

In theory, Procurement is easy. In theory, Supply Chains are smooth well oiled machines where I order X from you, and you ship it to me. In reality, nothing could be further from the truth!

Nothing makes the point clearer than when Mr. Köse points out that most of these so called “experts” could not pass his Economic Order Quantity (EOQ) exam question, which is totally correct, as I will dive into in a future post. (This is because, among other things, 1. the classic “textbook” formula isn’t always right, 2. doesn’t understand volume breaks and supplier economies of scale, and 3. requires you to be able to do actual math and logic to figure it out.)

Mr. Köse’s excellent article reminded me, as Bob Ferrari and I pointed out in a joint series in late spring on how Legacy Sourcing and Planning Solutions Struggle with Supply Chain Challenges, Direct Procurement is Failing. There are three big reasons for this:

  1. Direct Procurement CAN NOT be cut off from supply chains, as we outlined in detail in our 7-part series.
  2. Everything Mr. Köse’s addresses in his post!
  3. Most Analysts and Consultants fall into this fake “visionary” and “guru” category as well! (They’ve never worked in supply chain or worked hand in hand with experts with decades of experience trying to build useful solutions for those experts to use. One of the best example of this is when these f6ckw@ds use third party analyst firm studies to tell you that your headcount is too low or too high or your tech investment too low or too high without having an actual clue what your company actually does or what your Procurement and Supply Chain personnel actually do. [These Masters of Business Annihilation believe they can manage off of a spreadsheet when, again, nothing could be further from the truth. There’s a reason that the first Gilded Age was ruled by Engineers, they actually knew how to run a company! All today’s financiers can do is take a company with stratospheric profit potential and have it come-apart mid-flight, with Boeing being a prime example — if Engineers were in charge, planes wouldn’t be falling apart in the sky AND the revenue and profits would be a lot smoother!])

Over the summer, Bob and I reviewed over 40 recent studies from the past 5 years from big analyst firms and consultancies on the state of Procurement & Supply Chain — and they all have the same two things in common:

  1. they all tell you about the same barriers/roadblocks, risks, concerns/priorities, and talent gaps that are facing Procurement and Supply Chain
  2. they don’t tell you what to actually do to solve these issues (except, of course, “drop Agentic Gen-AI in” because that will “auto-magically solve everything“) because they don’t have a clue how to address these real world problems!

(Right now we’re trying to figure out how to write our next series, or maybe book, on how you actually address the issues with real process and real supporting technology to get results, assuming, of course, you have real talent that’s been-there, done-that and not these tech-bro AI hipsters that literally can’t create a PO [or even read a contract without putting it through faulty AI first]. It’s quite challenging because, apparently, no one has actually tackled writing something truly helpful before in our joint space and we’re struggling on how to make it useful and digestible in the age of marketing sound-bites!).

The reality is that, just like Procurement has not changed since the first handbook was published 136 years ago, neither has Supply Chain! While Mr. Köse doesn’t explicitly say this, he does allude to the fact that we’ve had global trade for THOUSANDS of years and we’ve always had the same challenges (that revolve around geo-politics, risk, cash-flow, and trust) — it’s just that we’ve replaced paper with digital bits and found new ways to make it more complicated. However, the processes, goals, and realities are the same — and you’d know that if you ever actually worked in or supported global supply chains (and not just pretended you understood what they were to try and sell your shiny new tech toy)! If you don’t understand this, you’re going to continue the 25 years of project failure (where the technology project failure rate is now at an all time high of 88%) and possibly be the next great tech-led supply chain disaster!

Finally, Mr. Köse was right again! Orchestration really is just clueless for the popular kids, selfies included!

P.S. If you haven’t figured out yet that you should be following Mr. Koray Köse on a weekly basis, then figure it out now. You might think that some of his forays into geopolitics or broader supply chain is not all that relevant to your daily Procurement tasks, but the reality is that if you don’t keep up with what’s going on in the world and how that could impact your supply chains beyond tier 1, you’ll be in for a real shock to the system. This is because, when you least expect it, a critical product or component won’t show up, the supplier will be unresponsive, and you’ll have no notice that you immediately need to find a replacement (but because that supplier controlled a significant percentage of market share, there won’t be one). Unlike Billy Idol’s shock to the system, yours won’t feel so good when this happens. (But if you keep up with major events, you can identify those that may impact your supply chain, verify or disqualify, and then start working on mitigations for those that might impact you significantly before it’s too late.)

Sustainability in 2025 and Beyond, Part 6: Sustainability Strategies, Part III Demand

In our first installment we noted that while sustainability may have fallen out of favour in the current American political and regulatory environment to the point that we had to counter the Chief Sustainability Officer graphics going around earlier this year with a Chief Sustainability Officer: USA Edition, sustainability, at its core is becoming more and more important to corporate survival. In our second installment, we described how sustainability concerns permeate every department of the organization, and failing to adhere to them is not only unsustainable in the environmental sense, but also in the business sense. In our third instalment we dove into the stakeholder engagement that is required for true sustainability success.

Then, in our (forth) installment, we started outlining the key areas of focus to identify the key projects that will increase both environmental AND business sustainability, starting with energy. We followed this up in our fifth installment with (fresh)water reduction. In today’s, sixth, post we continue with key project identification in the areas of demand.

Non-Renewable Resource Reduction

Unlike the first two posts, where we could pinpoint specific situations where you had a lot of opportunity for sustainability improvements that would lead to significant cost reductions (which is the ultimate key to business sustainability), this depends on what you are buying, what options are at your disposal, and how much opportunity you have for substitution and/or re-design.

Let’s take a few examples to try and explain this:

  • Packaging: you can use new packaging made from freshly cut trees, or you can use packaging with a high concentration of recycled material
  • Fuel/Plastics: you can use petroleum-based fuel and plastics or you can use biofuel/bioplastics
  • Electronics: you can use rare earth magnets with ferrite magnites or continue your research into iron-nitride and magnesium-based alloys for permanent magnets and focus on developing alternatives to lithium batteries such as sodium-ion, zinc, or solid-state batteries

There’s no magic formula for identifying which non-renewable resource-based products can be replaced with products that are based mostly, or solely, on renewable resources beyond examining every product you are purchasing for alternatives. Fortunately, that’s not as hard as it was twenty years ago with modern technology that has extensive built-in catalogs, pre-defined SKU similarity groupings, and custom-designed AI for identifying similar products that could be potential replacements that can recommend potentially more sustainable alternatives for consideration on every product selection.

One-Time/Short-Term Use Demand Reduction

As with non-renewable resource reduction, it’s not easy to identify one-time use demands that can be eliminated without careful consideration of why the demand is there and what the alternative is. However, all one-time use products should be evaluated for reduction and elimination opportunities.

For example, you should analyze:

  • print catalogs, newsletters, (free) magazines and flyers: yes, there is still a generation that likes them, but that generation is shrinking fast as even that generation is hooked on the internet, which allows for faster, quicker, paper free delivery; if you have a small percentage of the customer base that wants paper, at least let them self-select into a subscription and then only print (on demand) what you need to; the per unit price may be a few cents more, but if you’re only printing 1/10th of the volume, big savings in cost and resources
  • printer paper similarly, how much do you really need to print — if your team needs reports on the go, consider supplying everyone with a large tablet (with a display optimized for reading) in addition to their laptop
  • plastic cutlery and cups in the break room use real ceramic and stainless steel

Basically, look at anything that has a short life-span and see if you can reduce or substitute the demand with something with a longer lifespan that will lead to savings in the long term.

Equipment Reduction

Basically, how much equipment are you buying vs. how much equipment do you need? Consider the following:

  • end-user electronics focus on selecting phones and tablets with long shelf-lives and extended warranties, and laptops that can be upgraded to extend their shelf-life
  • IT servers and storage how many do you need to support your secure internal operations vs. how much demand can you shift to the cloud for on-demand computation
  • fleet do you need as much as you have? is it hybrid/electric with a longer lifespan than traditional diesel?

Again, as per the past two situations, every organization is different, and it will take careful review of alternatives to determine where sustainability will bring savings and where it won’t. But, as per our section on non-renewable resources, modern technology can do a great job identifying when there are more sustainable cost-saving options to consider.

However, as with energy and water utilization, at the end of the day, there are many opportunities in a business to be truly sustainable …. and by that, we mean choose environmentally friendly options that save the business a considerable amount of money, especially in the mid-and-long term. That’s what sustainability is truly about.

Sustainability in 2025 and Beyond, Part 5: Sustainability Strategies, Part II (Fresh)Water

In our first installment we noted that while sustainability may have fallen out of favour in the current American political and regulatory environment to the point that we had to counter the Chief Sustainability Officer graphics going around earlier this year with a Chief Sustainability Officer: USA Edition, sustainability, at its core is becoming more and more important to corporate survival. In our second installment, we described how sustainability concerns permeate every department of the organization, and failing to adhere to them is not only unsustainable in the environmental sense, but also in the business sense. In our third instalment we dove into the stakeholder engagement that is required for true sustainability success.

Then, in our last (forth) installment, we started outlining the key areas of focus to identify the key projects that will increase both environmental AND business sustainability, starting with energy. In today’s, fifth, post we continue with key project identification in the areas of (fresh)water and resources.

(Fresh)Water Reduction

Water shortages and scarcity is becoming all too common. More than 50% of the USA — the richest country in the world which, theoretically, could have the best infrastructure — has suffered droughts and water scarcity issues, with scarcity often getting so bad in parts of California that even the US President says they need to open a very large faucet (which doesn’t exist, but it is needed).

It’s so bad in California that they had to serve Nestlé a cease-and-desist order to stop it from taking millions of gallons of water it wasn’t entitled to. (Source: The Guardian). Thus, unless you want your taps to run dry (either due to lack of water availability or the local government agency literally turning your taps off), you need to minimize your water usage.

The major uses of water in most businesses, depending on the business type, are:

  • Restrooms/Showers Old fashioned, high water usage toilets and urinals, and high-flow shower heads (instead of low-flow, high pressure) combined with poor maintenance with constant, unaddressed, slow leaks waste a considerable amount of water. Reductions of up to 50% water usage with proper equipment selection and installation are possible. (Proper selection is key, not all low-flow models actually meet the MaP test measure they advertise, and a high scoring model is key, because you don’t save water if you have to flush two or three times.)
  • Water Cooling This is especially critical in power plants (which can consume millions of gallons of water daily) and IT data centers (which can also consume hundreds of thousands of gallons of water daily). Because contaminates like minerals, scale, and bacteria build up over time and evaporation occurs, water cannot be reused indefinitely, but with proper treatment and filtering and cooling systems (passing through high efficiency refrigerated zones), the amount of freshwater required can be greatly reduced, especially if there is a renewable energy source to power the refrigerant based cooling in the closed-loop system (and extremely good high-efficiency reverse osmosis systems). With today’s technology, except for regular top-up to deal with evaporation, it is possible to recycle water for years, whereas a decade or two ago the systems might have needed to be flushed every few months.
  • Irrigation Many office buildings or facilities also include land with greenery that needs to be maintained, usually with fresh water, which, in peak heat periods, can consume thousands of gallons of water a day — if the facility installs a small wastewater filtration and management system, as well as an underground irrigation system, a lot of the wastewater that goes through its building sinks and showers can be automatically pumped through the irrigation system, minimizing the need for freshwater for irrigation

We’ll continue with the other areas in our next installment.