Category Archives: Best Practices

Dear Procurement Organization, Are You Making The Big RFX Faux-Pas?

Short answer: If you have an RFX due this month, you in all probability are!

Right now, many vendors have more RFXs due this month then they have had due the last two months, and the big question we all need to be asking is why.

Are these organizations really going to make a decision this month? Are they even going to evaluate these proposals this month? The answers are, of course, no and no! So why are the proposals due?

the doctor completely understands the desire to start evaluating proposals as early as soon as possible, but when as soon as possible is probably mid-January or later (when everyone returns from holiday vacation and deals with the fires that have been lit in their absence), why should the proposal be due this week?

Yes, vendor representatives take holidays too, but the best vendor representatives for the best vendors do not take holidays when you need them — or their best. And if you delayed your proposal due date until you actually needed the proposal in January, the best vendor reps would be back to work on the 27th spending even more time on your RFX to get you all of the details, value models, and other information you need to make the right decision.

But if you insist on a proposal weeks, or even months, before you are going to seriously evaluate it and make a decision, you are shorting yourself … and your supply chain peers (and even suppliers) who also have RFXs in to the vendor and need the vendor to put its best foot forward to make a proper decision.

So, don’t ask for an RFX until you are truly ready to review it when all you need is a confirmation of intent to submit and maybe a simple RFI with basic vendor information to (pre)qualify them. Ask for what you need only when you need it and you will get better responses, make better choices, and get better results!

Cognitive Procurement? How about Plain Old Informed Procurement?

While the true Procurement leaders (that pose a subset of the Hackett Group 8%) may be looking ahead to cognitive procurement solutions in the new year, the reality is that the majority of the market is still just looking for insight.

LevaData, one of the few true Cognitive Procurement players (reviewed in this post and in detail in a 3-part Spend Matters Pro series co-authored by the doctor [Part I, Part II, and Part III), recently released the results of its 2017 Cognitive Sourcing Survey that had some scary statistics that included:

  • only 13% of procurement managers engage with their suppliers on a constant basis
  • RFQ total cycle time for an average organization is 40 days
  • only 5% of respondents use third-party, purpose-built solutions for business and market intelligence, with 67% relying on internal solutions and/or Excel spreadsheets! (which is how not to excel at forecasting)

OUCH!

How do you know what you should be paying if you don’t even know what the market is paying? How can you get anything done if a simple request for quote, which only goes out after the specs are complete and the suppliers have an understanding of what you want, takes 7 weeks! (When it shouldn’t even take 7 days!) And, most importantly, how do you have a clue how things are going if you don’t engage with key suppliers regularly?

For the majority of companies, it’s not about cognitive, it’s about entering the modern age. Cognitive would be nice, but right now, they need plain old market intelligence, spend visibility, supplier relationship visibility, and efficient e-Negotiation automation. Without this, they are stuck in the industrial revolution … like their great great grandfathers were 100 years ago!

Catalogs Will Never Die

You may think catalogs are passe, but you need look no further than Coupa’s, yes Coupa’s, acquisition of Simeno … for it’s catalogs! WOW! Isn’t that what Coupa did, easy catalogs for easy buying?

According to the press release it acquired a leader in cross-catalog search and advanced catalog management that creates localized content from third-party supplier sites to power cross-catalog searches, including content from many of the leading B2B marketplaces and it did it to grow its Open Buy Program with the addition of the marketplaces to deliver a best-in-class cross-catalog search capability that is competitively distinguished while increasing its local presence in key German and Swiss markets.

We guess Coupa really wants to be the Amazon Business of the S2P world in the global market place!

But it does prove our point – the paper may have gone away, but people love their catalogs! Search, click, buy. Search, click, buy. Why RFI when you can search, click, buy. And, implemented and managed right, they are a great tool for attacking a significant portion of often overlooked tail spend.

And even if people don’t, this is obviously what Coupa believes as the new Simeno site focusses entirely on catalogs and those of you who knew Simeno knew that, especially if you read the Spend Matters Pro brief co-authored by the doctor (Part I, Part II, and Part III [membership required]), they also offered a procurement, basic contract management, and basic analytics application as well before the acquisition.

The catalog is dead. Long live the catalog!

A Lighthouse Without a Sufficiently Bright Light …

… does little to steer ships from the rocky disaster that is about to befall them. All it does is make clear the impending doom that awaits the ships unable to escape the waves about to crash them on the rocks.

Similarly, a spend visibility solution that does little more than show you data a quarter old without any ability to derive trends and capture outliers in realistic time frames, is no better than a lighthouse without a sufficiently bright light. All you will see is how much you over-spent on goods and services in the past, with no ability to recover that spend.

If you want to avoid hitting the spend management rocks and seeing all those negotiated savings go out the window, you need a solution that allows you to see your spend at most a month in the past, and for fast moving inventory, a week. You need a solution that allows you to plot trends, past, present, and future based upon similar market conditions; alter those trends based upon projections; and determine savings / loss opportunity based upon those projections that you can act on … while you have the opportunity.

Similarly, you need a solution that can capture all the contracts and contract rates, with all the contract suppliers, that can detect as soon as spend is off contract, who made the spend, where, and if it needs to be addressed. Roll it up, send it to the right managers and account managers, and make sure it’s addressed while the suppliers are still under contract.

But without this solution, you have no idea what is overspent, where, why, or how. — until it’s too late. And there’s nothing you can do about it. Don’t be in that position.

UX is More Than a Functional Experience, It’s a Program Experience

This year we’ve attacked the UX in Sourcing and Procurement solutions, and for e-Auctions, e-RFX, Optimization, Spend Analytics, and Procure-to-Pay in particular. This was great, but if you really understand Sourcing and Procurement, you know that it’s more than just a set of (integrated) modules with a great user experience. It’s a plan, a process, and, most importantly, a program.

Those organizations that are reasonably advanced in their sourcing journey know that the best success often comes from a category management program that starts with category identification and opportunity assessment, proceeds through a sourcing plan, and then the sourcing process, which culminates in a contract, that then flips over to Procurement which issues a purchase order, receives one or more goods receipts and invoices, issues approvals, and, finally payments. This is all part of a program that works against a project plan and one or more category goals.

This project plan also needs to be managed. Hopefully within your S2P suite, but if not, in another tool that, hopefully, integrates with the S2P suite or, in some cases, the organization’s mix of best-of-breed Supply Management applications. But, as one might surprise by now, such a tool must be immensely usable and provide a great user experience if it is to be used.

However, this is easier said than done because simply slapping a great user experience on a traditional project management tool is not going to cut it. This is because the types of programs that revolve around Sourcing, SRM, Analytics, and P2P are considerably different and require functionalities considerably above and beyond a typical project management application. In other words, slapping a category management theme onto a project management or sourcing application won’t make the grade.

This is why the next UX series produced by the doctor will be on Program Management UX, with the P2P posts co-authored by the revolutionary. So keep a watchful eye out for this one — it might help you understand some of the key functionality that should be included in your S2P platform, which many platforms are still missing today.