Category Archives: Best Practices

All Hail The Gruntmaster 6000!

It was more influential than you think!

The Gruntmaster 6000, first introduced in the The Name, and eventually realized by Infomercial is, more importantly, a great foundation to explain why the doctor started Sourcing Innovation and why it is still going SIX THOUSAND (6,000) published articles later (even though the GruntMaster 6000 ended up being an exercise machine with a graviton generator)! (And yes, this is the 6,000th published article on Sourcing Innovation.)

In The Name, it all starts with the team, including Dilbert, being challenged by the PHB (Pointy-Haired Boss) to come up with a new product (to replace the product that killed everyone who used it), starting with the name — which he believes is more important than whatever the product ends up being! A name that has to ultimately be approved by the CEO, who, of course, also believes that the name is the most important thing ever!

It’s an attempt to clarify, in a humorous fashion, both the absurdity of modern marketing for technology products and modern “suit” management who, when they are running a company they fundamentally don’t understand (still a big problem today, and we’ve had multiple recent examples of why accountants, bankers, and lawyers should NEVER run tech companies), over focus on details that just don’t matter.

And, more importantly, propagate the belief that all you have to do is select the “right” product, where the “right” product is obviously the one from the most successful company, because if a company is successful, the product must be good, right? And how do you identify the most successful company? The one that looks most successful, and, obviously has the most successfully sounding product name, right? Right?

WRONG! It’s the propagation of this problem into Procurement which is why Sourcing Innovation exists. The belief that you can pick a few successful companies, throw a problem over the wall, and get a good solution. And while you theoretically can, if you don’t pick the 3 best companies for you, the odds of you getting a good solution are not good. In fact, the odds of you getting a good solution are vanishingly close to zero! (That’s why at least two thirds of technology projects fail. Standish Group’s CHAOS 2020 report analyzed 50,000 global projects and reported 66% failure rate. And that’s one of the lowest reported failure rates the doctor has ever seen. Many of the reports he’s seen over the last two decades report 70% to 85% technology project failure.)

And you can’t pick good companies unless you know

  • what makes a good product
  • what makes a good company
  • … and, most importantly …
  • what you need the product to do
  • what you need the company to do

And that requires education. Continual, never-ending, education. Education that no one was giving you in the sea of (marketing) madness. That’s why Sourcing Innovation exists, and why it is still going SIX THOUSAND published articles later.

And, FYI, because the focus is on education, with the exception of a few hundred posts on products that no longer exist, the vast majority of what was written in the early days is as valid today as it was then. For example, the doctor, thinking ahead to the inevitable conclusion of outsourcing (and understanding EVERYTHING wrong with it*), has been preaching the desperate need to return to on-shoring, near-sourcing, and even home-shoring for the past fifteen (15) years! And every single one of the 101 Procurement Damnations still exists today! So feel free to jump back to the second post on Strategic Sourcing Innovation Defined published on 2006-June-10 and start reading forward. the doctor is sure you’ll learn something from almost every single post! And the best thing about going back to the beginning, you can read an hour a day every day for the next year and still not make it to 2024! (At roughly 5.8 MILLION words, and an average reading speed of 238 words per minute, the average reader will have over 406 hours of reading!)

* as he did study the history of trade as well as pre-recorded history, early history, archaeological, and anthropological methods [even though sometimes he thinks a better understanding of cryptozoology might help him understand modern business better] … and he’s even gave a presentation on the archaeology of spend analysis, as many of the best algorithms for spend analysis have their roots in the algorithms developed by mathematicians for archaeologists …

RFP Everything? Are You Mad? Even The Squirrels Will Think You’re Nuts!

A recent post on LinkedIn that proclaimed Exciting News! (and which should have exclaimed Good News Everyone*) worries the doctor greatly because a remarkable example of AI was

autonomous tail spend RFP’s, generating over 15,000 RFPS annually through a programmed bot!
 

EEEEEEEEEEEEEEEEEEEAAAAAAAAAAAAHHHHHHHHH!!!!!

15,000 more RFPs for inconsequential tail spend might sound exciting to buyers, but it’s terrifying to sales professionals who are already over-inundated with ever more demanding RFPs where they know, statistically, they will only get 20% to 33% of the business if they are on par with their peers, and the odds will be worse if they are not.

More RFPs, or even just quick-quote RFQs, is NOT the answer to good tail spend management! If you try it, you’re just going to end up:

  1. losing potential suppliers who just drop you because you can’t keep up with the volume or
  2. getting auto-generated responses from suppliers who “wise up” and counter idiotic tech with idiotic tech — and these may be good, or may be pointless …

You need to use tech to find the best deals on tail spend WITHOUT overburdening the supply base. This means, at a minimum, you need tech that:

  • allows you to find potential products/services in your catalogs / covered under your agreements
  • find potential products/services from your GPOs
  • find potential products/services from preferred suppliers
  • … and identify the lowest cost items from the groups above
  • identify potential products on the open market
  • … and identify the expected lowest cost as a baseline
  • identify past events, possibly in an anonymized community intelligence database,
  • … and how much the price was reduced against catalog/market price
  • and then let you know whether or not an RFQ will likely result in a significant savings (not just 1% or 2%, it’s tail spend, after all), and, if not, present the best option that will NOT over-inundate, and deprive you of, good suppliers in your supply base

Just like AI in marketing, too many RFPs is just adding to the noise, and no one wins when neither side can hear what needs to be heard!

* It was NEVER Good News!

Proper Solution Selection is Harder Than You Think!

In Jon The Revelator‘s recent post on what can 2005 tell us about Procurement AI in 2024 he listed a dozen vendors from 2004 that no longer exist and asked if we recognized these names. To this, the doctor replied every single one and noted that the market is even more fragmented today than it was in 2004 and pointed you to the Source-to-Pay+ Mega-Map. Jon then asked if history will repeat itself, and as per the doctor‘s recent post on Market Madness, it will … with a vengeance!

This response prompted The Revelator to ask which companies would join their brethren from 2004, to which the doctor provided some indications, which were many (and even more numerous in the Market Madness post). So The Revelator then asked what do practitioners need to do during these pending turbulent times? The real answer is quite a bit and, in fact too much to address in a single article, or even a book, so the doctor decided to focus in on stable solution selection.

And while the doctor made it look as easy as 1, 2, 3 in his comment, when he said:

  1. first identify what kind of solution you need
  2. then identify which providers actually offer those solutions for their geography – market size – vertical
  3. then restrict down to those that are *stable*

It’s a lot more complicated than that, and for some companies, some of these steps will consist of many steps within themselves.

What kind of solution is complicated! At a minimum, one needs to consider:

  • what processes are you doing
  • … and which of these are properly, or not, supported by your current tech
  • what processes should you be doing
  • … and what tech will support those
  • and which subsets of tech are the most relevant (and make sense to focus on)

Which providers is harder.

  • many providers will claim to be everything to everyone, but that’s not true
  • the big analyst firms over-focus on the big vendors, because that’s who they have to (contractually) spend most of their time on
  • smaller firms will focus on the smaller vendors, because some of the big ones believe their big cheque to the big firm(s) covers all their marketing/market needs, and may not have the time to dive deep into geography – market size – vertical appropriateness
  • and logo maps don’t give you near enough detail to even get a short list

In other words, it’s a heck of a lot more than just choosing the first 5 names that come back in a Google or a “chat, j’ai pété” search!

You want a vendor that is going to be around, or if acquired, a solution that is going to be maintained because it’s growing year-over-year, wasn’t built on an oversized investment (pressuring the firm to increase prices or cut costs or grow too fast), 10+ to 50+ customers (depending on solution type and implementation / replacement time and cost and risk tolerance), etc. Where do you get that data? How do you ask in a way that won’t result in the sale person clamming up?

It’s more than most Procurement organization’s can handle as they just don’t have the TQ (Technical Quotient) or the market knowledge. They need to get help from an expert who does who is not biased towards any particular vendor and will follow a proper process, not just throw an RFP over the wall to three providers they have worked with before (as that’s no better than a refined “chat, j’ai pété” search)! And it can be hard to identify the right expert (and the only hint the doctor will give you now is you’re less likely to find one at a random Big X or Mid-Sized Consultancy — some of the Big X, especially those that have been acquiring expert AI and Analytics firms over the past few years, and mid-sized consultancies have them, but these experts are few and far between, spread thin, and unless you are a Fortune 500 / Global 3000, at most of these firms you will be fighting for the senior expert’s time). You might just need a niche consultancy with experts who specialize in this. There are a few, but not as many as the space needs.  [Take into account when you should use a Big X and that it is up to you to properly specify the project, evaluate the proposal, and vet the personnel proposed.  Otherwise, it’s your failure.]

Have We Been In The Dank Basement So Long That We Don’t Care If the Fish Stinks?

the doctor has to ask because when Jon The Revelator asked if you would eat a piece of fish that has been in your freezer for 10 years? 5 years? 1 year? not many of you spoke up and it seems you are quite okay with old, smelly fish, which, in this case was a metaphor for provider case studies, as this was a follow up to The Revelator‘s post that asked Should Solution Provider Case Studies Have a Best Before Date.

A question, which was in turn sparked from a comment by Duncan Jones to his preceding inquiry on what can 2005 tell us on why most AI initiatives fail in 2024, which is a question that was partially sparked off of a post the doctor himself made on how we need to hasten onshoring and nearshoring — the drivers will pound those who don’t into the ground! (Part 2).

While this sounds like a long, meandering, pointless introduction, it’s exactly the opposite. The purpose is to demonstrate that not only are many parts of Procurement and Supply Chain connected, but they are connected in complex ways that require sufficiently broad, as well as sufficiently deep, solutions that address the complexities being experienced by the organizations a vendor is trying to sell to.

Furthermore, this means that for an organization, or a consulting partner, to select the right solution, they need deep information on what the solution does, where it’s been used, and what it has been proven to do. Traditionally, this would mean that they would require product sheets and demos, customer references, and case studies to make a good decision.

However, centering in on this last requirement, not all case studies are created equal, and not all are even “case studies” at all. What once was the domain of third party analysts, consultants, and professors (who would do proper due diligence, data collection, and impartial write-ups for educational and investment purposes) has now become the domain of marketers who get happy customers, often still wearing the rose-coloured glasses that came free with the install, to tell a story that they write-up and promote using very little, and often unverified, data. Those are not useful at all. Furthermore, if you don’t know what version of the software, what stack the customer ran on, and/or, and sometimes most importantly, when the study was done (and the time period it was done over), is it even still relevant at all?

This prompted the critical question from The Revelator about whether or not studies should have a best before date. the doctor leans towards no on best before date, because just like different types of fish have a different shelf life, different case studies will have a different shelf life, but votes a most definite yes on a packaging date.

To elaborate on the comment he made when asked, the following is absolutely critical to be included in the case study:

  • when the case study was written (packaging date)
  • the time period it was over (processing dates)
  • the precise metrics that were tracked and how they were computed (labelling compliance)
  • the extent of organizational data that was used (ingredients)
    [as well as the full extent of data available (may contain)]
  • the products, and versions, that were used (processing)

In other words, a feel-good story with a few random numbers is not case study! (the doctor would say any marketer trying to pass such off as one should be ashamed, but any marketer who did would obviously be without shame, so there’s really no point in saying it.) A case study has rigour in definition, methodology, data collection, and exposition and contains all the information that would be needed if a third party wanted to repeat it. (The same way a scientific study provides enough detail for an independent team to verify it.) Anything less should be considered unacceptable.

And, most importantly, since business processes, products, systems, and stacks continually change, a study (processing) date and a publication (packaging) date MUST be included so that a buyer can make an informed decision as to whether that study is still relevant to them (as they decide just how much stink they are willing to tolerate).

Playbooks? Those Were the Good Old Days!

THE PROPHET Jason Busch recently posted about 50 Years of Pivots in Procurement where he stated that:

  • 1980s: Procurement is Supply (prioritize)
  • 1990s: Procurement is Sourcing (save)
  • 2000s: Procurement is Transactional (systematize)
  • 2010s: Procurement is Spend (manage)
  • 2020s: Procurement is Playbooks (rinse/repeat)
  • 2025 : Procurement is …

the doctor‘s first response to this: Playbooks? He wishes!

In the late 2000s and 2010s, the top Procurement consultancies had playbooks that had good processes, methodologies, and metrics that would help any organization not best in class out-of-the-gate because they were built on tried-and-true processes, analysis, and results that worked. They weren’t centered on just implementing tech for tech’s sake, trying to roll out Procurement for the masses (who didn’t want, or need, a full Procurement solution — just easy acquisition of the products and services [they were responsible for buying to do their jobs on a daily basis] in an organizationally compliant way), or implementing AI for the heck of it (because they over-invested in training their workforce on Gen-AI solutions that have no value).

But that’s not the worst of it. In the doctor‘s view, the worst of it is that

2025 Procurement at many organizations is (on the road to) “Consumer” (intake/orchestrate).

Procurement is now all about ensuring every single person in the organization can “buy” on their own from the catalog or preferred vendor with no real management as long as they have “budget”, “authority”, or it’s a “preferred vendor”.

That’s just transactional Procurement on steroids. (i.e. it’s 2000 all over again, we just survived Y2K, and we don’t know how to manage spend with tech … really?) Now, it’s true that getting Spend Under Management (SUM) is good if you do something with that Spend Under Management data, but this surely isn’t.

Why? First of all, if you talk to a real old timer who did Procurement in the 80s/90s about this “intake” or “orchestrate” phase and they’ll probably say they just don’t get it. As far as they are concerned, Procurement is supposed to be more strategic and focus on all encompassing processes, strategies, negotiations, etc. Not about trying to manage every single nickle-and-dime purchase in the organization. This is one of the leading reasons results (and costs) in most organizations are getting worse, and not better.

Secondly, see our recent post on how Marketplace Madness is Coming on how

  • “Pay For View” Intake makes no logical sense
  • “Solution Sprawl” Orchestration doesn’t make any logical sense either
  • when it comes to I2O, it’s “where’s the beef” and “where’s the market” [hint: not where most of the providers are looking]

Furthermore, the age old analogy applies here — they can’t see the forest for the trees. Nor can you manage it that way. If you spend too long trying to focus on each individual sick tree you come across, the sickness will spread and consume the forest. Sometimes you have to just cut and burn the tree.

In other words, the madness is taken us towards consumerism in Procurement, and it’s the wrong path! We need to get back to process-centric playbooks, and let the tech take back-stage, as the tech supports Procurement, it doesn’t do it, or solve it, on its own.