Author Archives: thedoctor

Digging into the S2P Tech Foundations

In our post yesterday in what makes a good foundation for S2P Tech, we noted that if you wanted to have any hope of “future-proofing” your platform, then it was critical that you acquired a platform with the following four capabilities.

  • Configurable Workflow preferably with RPA support
  • Open / Extensible API that supports integration into and out of your platform
  • Dynamically Extensible Data Model that can be extended by the customer
  • Globalization Support for language, currency, data location, and more!

And we gave some preliminary reasons, but today we’re going to dig into some of the issues that really concern us.

  • Changing Governmental Regulations as governments introduce e-commerce, they are introducing e-invoicing requirements that can change your P2P flow (like requiring invoices to be sent through government servers or payments sent through government servers) and as governments introduce more regulatory compliance, the ability to report the complete origin story of a product, to the source of each raw material, is going to require more cross-platform and cross-enterprise data collection
  • Data Bifurcation as more and more platforms proliferate across the supply chain, the data will continue to proliferate as well … and without the ability to connect all the platforms, the data will exist in separate islands
  • Increasing Supply Chain Segmentation across more and more companies across more and more companies across more and more global users
  • Platform Obfuscation because the platform can’t keep up

These issues are the main drivers for the foundational platform requirements we outlined yesterday. Without

  • Configurable Workflow
    the platform won’t keep up with changing government regulations as it won’t be able to adapt the process
  • Open/Extensible API
    the platform won’t be able to manage the data bifurcation or prevent platform obfuscation as it won’t be able to adapt as required to manage the data tracking or integrate with new modules as they come online
  • Dynamically Extensible Data Model
    as future data requirements dictated by future regulations and future applications can’t be predicted in advance
  • Globalization Support
    as your next supplier could be in a different country, on a different continent, with a workforce whose primary language is one you haven’t dealt with yet … and that could be tomorrow!

Now, these aren’t the only issues we’re worried about, but they are big ones and they are guaranteed to materialize — soon (and before your contract comes up for renewal) — which is why we’re really concerned about them, and about insuring you get the right platform for the long term.

What is a Good Foundation for S2P Tech?

A couple of weeks ago in our posts on What Elements Should You Be Looking For In A Platform (Part I and Part II) we outlined some of the key platform requirements we are looking for in the new Spend Matters SolutionMap (where Sourcing, SXM, Analytics, and the vast majority of Common Platform requirements were defined by the doctor) to give you a hint, but it’s a lot to take in.

And might be more than you need today when you just need to solve a few major pain points and advance on your S2P journey, especially if you still don’t have any dedicated modern technology or are still on Procurement 1.0 when most of your peers are on Procurement 2.0 and the leaders are starting on the Procurement 3.0 journey. (As per another recent post, while there’s a lot of talk about Procurement 4.0, we won’t see it for another 8 years based on history. 1.0 started around 97 with FreeMarkets and the emergence of stand-alone players. 2.0 started around 2007 with the first mini-suites [S2C or P2P]. 3.0 began around 2017 with the rise of the true [mega] S2P suites and integration that allowed for the pursuit of value where the whole is greater than the parts. 4.0 will began around 2027 based on the rate of historical development.)

But it’s not necessarily more than you will need in time. Especially if you want to reach the height of Procurement 3.0 with your peers when it materializes later next decade.

But we do recognize that you won’t need it all today. So what do you really need to look for in the first go-round? Especially if you can’t have it all or can’t become enough of an expert to evaluate it all?

While the most important capabilities do depend on the specifics of the technology you’re buying and the problem you need to solve, there are a few general capabilities that need to be there regardless, and these * capabilities in particular must be there in every solution you buy if you want to have any hope of “future-proofing” your platform.

  • Configurable Workflow
    Preferably with RPA support. Let’s face it, whatever process you use today won’t be the process you use tomorrow, especially as you mature in your processes and best practices, the partners you work with change, and governmental regulations continue to change the way you have to report.
  • Open / Extensible API
    that supports both 3rd parties integrating with your platform and the development of interfaces to integrate with third party platforms through their open API. Your platform will never do everything, no matter how much you want it to. It’s software, not sorcery. So the ability to extend it with ease is critical.
  • Dynamically Extensible Data Model
    that you can do, not a third party or the provider. Because you never know every piece of data you’re going to need until you need it.
  • Globalization Support
    including the ability for a user to select their language and overrides, the organizing to define new currency exchanges and projections, and IT to define where the application instances are hosted and where the data is stored (which may need to be segmented for a global organization)

This is not to say that other technical requirements are not important, but that without these, the life expectancy of your platform is limited, to say the least.

Realizing Those Savings Is No Easy Feat

Especially when it requires achieving the perfect order.

So how can you maximize the chance of a perfect order, which, by definition, is acquired at just the right cost (which, technically means there are no savings to be had beyond what you negotiated when you signed the contract).

As per this post, for savings to materialize, the following necessary (but not sufficient) conditions have to be met:

  • the order has to be placed with the contracted supplier
  • with sufficient lead time
  • and then shipped by the supplier on-time
  • using the approved carrier and shipping arrangement
  • with the required third party and government fees promptly paid
  • and paperwork promptly filed
  • so there are no delays and the product arrives at the warehouse on time
  • where it is properly received, inventoried, and shelved
  • and then the invoice is verified against the good received and the PO
  • and paid at the right time when everything is okay.

This is a tall task, taller than accepting the tall tale of Jonah and the whale, but not an impossible one, and no miracles are required to make it so. Just the acquisition of the right technology, implemented in the right framework, supporting the right processes, and tailored to support your organizational talent. It will take some terrific transition management to get the right organizational alignment, but such alignment is possible, and the leaders are getting closer — especially now that we are beginning to realize Procurement 3.0.

So where do you start? Acquire the core technologies you need to streamline your supply management practices.

  • a CLM solution to manage your contracts
  • an e-Procurement solution that only allows orders for products on contracts from approved suppliers
  • a demand planning solution (which may be part of a next-generation ERP solution) that integrates with your e-Procurement solution and notifies you when order deadlines are approaching and automatically submits auto-fill orders
  • a 3PL solution that tracks shipments in real-time
  • a Trade Management solution that automatically generates the required paperwork, computes the required fees, and manages, tracks, and confirms their submission
  • an Inventory and Warehouse Management System that integrates with the e-Procurement Solution that manages receipt, shelving, and distribution
  • an e-Procurement solution that also does invoice management and m-way matching
  • an e-Payment solution that integrates with the e-Procurement solution and includes Supply Chain Finance Capabilities (including dynamic discounting, supplier financing, and pre-shipment finance, for example) to help the company determine the best payment time

It’s just the beginnings, but it’s a good start.

Some Additional Screen Questions for Services Suppliers

Is Your Insurance Up To Date And Can We Have a Copy of Your Policy?

Let’s face it, it’s important that you are protected. Especially if you are hiring service people that will be performing tasks that have health and safety consequences such as window washing (they fall off the bucket-pulley), installing power lines (they fry themselves or people around them), or transporting hazardous waste (which doesn’t give people super powers, but can give them acid burns or deadly radiation poisoning). You don’t want lawsuits against you for a responsibility your service provider takes.

How many people do you have with the skill sets we require? How many need to have their certifications renewed in the next 12, 24, or 36 months? How many are within 4 hours of our location?

If you need 5 contracts with a given skill set and certification to do the job, and they only have 5, and those resources are also required by their other (higher-paying) clients, what is going to happen to your timelines? They are going to be shattered.

Moreover, if the certifications need to be renewed pn a regular basis, the last thing you want is a resource that is going to be grounded in 6 months to go take a training course if that’s a critical time in your project timeline.

And if you need a guaranteed response time by a certified professional within a few hours, if the closest resource is a 4 hour plane flight away, that’s not a good situation to be in.

How many claims have been made against you in the past year? And how does it break down in terms of safety vs performance/contractual guarantees?

Face it, if the provider is large enough, something is bound to have gone wrong according to Murphy’s law, or someone is bound to have made a claim, founded or not. And even if the provider is stellar, you need to know this as claims, and lawsuits, can take up their time and resources and put a strain on them that could carry to your projects if not known or managed.

Furthermore, safety issues are paramount so if the provider doesn’t have a good track record, you will need to think twice.

What is your on-time delivery rate for projects of the type we are requesting? When you are late, what is the typical root cause?

If you get this far down the list, then the next thing is to understand when something has went wrong, why. This can allow you to devise communication and monitoring plans to possible prevent disruptions or delays through early warning and better project and service people management.

What is your approach to joint project management? They’re your people, but they need to be meeting our project timelines?

If the service people are being hired to support a long-term critical project, and lack of the right people at the right time could jeopardize that project, then you need to now you have a service provider tha twill work with you to make sure you have the right people at the right time to meet your goals.

Some Screening Questions to ask Prospective Strategic Suppliers

Before you select a strategic supplier, no matter how good their RFI looks, be sure to ask them some point blank questions that are critical to your business and judge the answers they give you (as well as their openness and directness in giving you these answers). Remember, you’re depending on them to serve your strategic customers so you need to be sure they can get it right.

Can we have a copy of your Code of Ethics, CSR Practices, and Privacy Policies?

If the vendor doesn’t have any of these, or won’t give it to you, sound all the sirens and run for the hills. No organization can afford a publicity disaster these days, and a supplier without good ethics (that it is willing to follow), good social responsibility (that it is willing to enforce), and good privacy (that enable it to comply with legislation like GDPR) is YOUR publicity disaster waiting to happen — and we all know what that does to your brand value!

Can you provide 3rd party proof that you live up to it?

It’s one thing to say you have an ethics/CSR/privacy policy, it’s another to follow it — and another yet to have true third party proof that you do. Make sure the vendor has certified CSR and Privacy ratings from trusted, true, third parties (and not from a small consortium of vendors that fund the certification agency) and can point to at least one situation where it terminated a business relationship with a client or supplier that was unwilling to operate in an acceptable, ethical, fashion.

Can we have a copy of your Quality Assurance Process?

If the vendor doesn’t have one, or won’t give it to you, then you need to ask yourself what kind of quality you can expect. (The answer is obvious: low!) Note that you may need a document for each distinct type of product you purchase.

What certifications do you have with regards to your Quality Assurance Process? ISO? ASQ? etc.

If the vendor doesn’t have any certifications, how much faith can you put into the process the vendor is using?

Can you provide references from current AND former clients who did business with you for at least 2 years?

Just like your customers ask you for references, if this supplier is going to be strategic, you need its references. And remember that you don’t want references who have been with the vendor less than a year because the blush is still on the rose and they will be full of peace and love for the vendor. You need a real review from an experienced customer who can tell you what’s good and not so good. No vendor is perfect, and if the not so good is not relevant to your business, then their imperfection is irrelevant. Plus, if customers’ left, why? Was it due to a change in business? Or poor performance? If the customer left for due to a change in business, and they still have a good reference for the former supplier, then that speaks volumes. If the customer left due to continuously poor performance, that also speaks volumes.

What is your dispute resolution process?

Face it, at some point, something is going to go wrong. Sh!t happens. How do they deal with it? And is it a process that you can deal with?

Do you understand our business? Explain!

If the supplier has never supplied a customer in your vertical, and you have special needs, this could be an issue. It could also be an issue if they have never supplied a customer with special needs in your vertical or you have considerably different requirements than the average company in your vertical. Make sure the vendor has a good understanding of who you are as a company by asking this open ended question.

Who are your top competitors? Why are you better for us?

Everyone has competitors. If they don’t, then they are misguided or selling a product or service no one needs. There are no Blue Oceans any more, just open oceans that are only sparsely sailed (by a few companies who are eager explorers). Make sure they give you a few real competitors as well as a good reason as to why they are better, as this will serve to not only enforce their answer to the previous question (and let you know if they really understand your business) but let you know that they have attempted to be honest in their assessment.

Is this everything you need to ask to make sure the supplier can be a strategic partner? No. But it’s a good start!