Category Archives: Event

Source-to-Settle: More than Just a Set of Service Modules

Having Source-to-Settle capability involves having more than Source-to-Contract and Procure-to-Pay solution modules. As explained in our last post, if an organization wants to achieve the best results, just having both solutions is not enough. Certain categories of savings and value only materialize when the Source-to-Settle solution is integrated end-to-end.

For example, due to the existence of multiple, disconnected solutions which rely on multiple, disconnected databases, there are huge accuracy issues.

First of all, there is a proliferation of manual errors due to duplicate data entry. When data has to be manually re-entered into other systems, or selected for export and import to other systems, human error always creeps into the process. The average error rate for keystroke entry is approximately 1%, as tabulated by Raymond R. Panko at the University of Hawaii, and this human error can be very costly. For example, assume the contract pricing for laser cartridges has been erroneously entered into the Procurement system as $70 a unit when it should be $60 a unit. Further assume that the organization buys 1,000 of these a year and that the old rate was $69.95. If the Procurement system has a tolerance of error of 0.1%, then it will never detect if the Supplier continues to charge the old rate and the organization will overspend by $11,940. Now assume that the organization buys 10,000 units a year and all of a sudden the organization is out $119,400!

But this is just the tip of the iceberg. With multiple systems, there is no single version of the truth. So, if there is disagreement between the P2P and the ERP system, which system is correct? And which system do you run the analysis on to identify the target categories for sourcing? It makes a difference. The greatest value comes from identifying the category with the greatest opportunity. And that can only be done with complete, accurate data.

For more information on these missed opportunities, along with fourteen other opportunities that only materialize with an integrated Source-to-Settle solution, download Sourcing Innovation’s latest white-paper on how An Integrated Source-to-Settle Platform Brings Unparalleled Benefits to Supply Management and register for Ivalua’s upcoming webinar on how to Help Build Your Business Case Today on January 28 @ 11 PST / 14 EST / 19 GMT!

Prove Your Mettle with Source-to-Settle

We all know the importance of having both Sourcing and Procurement* solutions as neither solution on its own is sufficient to enable an organization to extract the savings and value inherent in each sourcing and procurement project. For example, the savings that result from the best negotiated contracts in the world as a result of an intense strategic sourcing project will never be realized when a lack of good procurement processes and systems results in over 30% maverick spend. Similarly, the best procurement processes and systems in the world are useless if the organization is unable to take advantage of the data and inherent efficiencies to source better contracts next time around.

However, if an organization wants to achieve the best results, just having both solutions is not enough. Certain categories of savings and value only materialize when the solution is integrated end-to-end. What do we mean by this?

Consider the situation that occurs when an organization has separate Source-to-Contract (S2C) and Procure-to-Pay (P2P) solutions. In this situation, what typically happens is there are two code-bases, relying on three separate databases, that rely on the ERP, the Vendor Master database it controls, and the Inventory Master database the ERP connects to, which is generally under the control of the Logistics and Warehouse Management solution.

In this situation, in order to accomplish a task, the Supply Management professional may need to consult three databases to find the information she needs, use two completely different workflows to issue an RFQ and then issue a PO, and use two completely different solutions to extract the relevant transactions for analysis and do the analysis. It’s not efficient, and, moreover, since data has to be entered in (at least) two different solutions, it’s error prone. As a result, the organization is missing out on up to sixteen different efficiencies and benefits that would otherwise be available to it.

What are these efficiencies and benefits? To find out, download Sourcing Innovation’s latest white-paper on how An Integrated Source-to-Settle Platform Brings Unparalleled Benefits to Supply Management and register for Ivalua’s upcoming webinar that will Help Build Your Business Case Today! on January 28 @ 11 PST / 14 EST / 19 GMT!

Remember, it’s Sourcing and Procurement!

It’s Illegal to Burn Money, But Yet Your Organization Does It Every Day! (So Find Out How to Do Something About It!)

Title 18, Section 33 of the United States Code says you shall not mutilate, cut, disfigure, perforate, unite or cement together, or do any other thing to any bank bill, draft, note, or other evidence of debt issued by any national banking association, Federal Reserve Bank, or Federal Reserve System, with intent to render such item(s) unfit to be reissued and if you do, you can be fined or imprisoned for up to 6 months. But yet, every day, organizations everywhere collectively flush billions of dollars down the drain, overpaying suppliers, including foreign suppliers, millions of dollars that can not be recovered and reissued by the organization for other business purposes.

If it wasn’t for the fact that the vast majority of these organizations don’t intend to overpay and waste money, since this money (and evidence of debt) flows through the American banking system, I would otherwise be inclined to argue that, technically, this gross incompetence in management of corporate funds is criminal.

For proof that the average organization wastes money, we simply have to look to the audit recovery industry which recovers, on average 1% to 1.5% of annual spend. And, typically, this is just what they can find with a quick, mostly manual, review of the top n suppliers that account for 2/3rds (66%) to 3/4ths (75%) of external organizational spend using a very loose interpretation of the 80/20 rule. And that’s just overspend. What about spend that should never of happened in the first place (because it was off-contract and 15% higher than contracted rates)? Or unrecoverable losses due to a key supplier not having mandatory insurance policies in place? Or gross violations of the T&E (Travel & Expense) policy (that border on criminal malfeasance) where the VP of Sales decides that a dinner costing 2K / head at the local strip club is a valid use of the organization’s P-Card?

But most of these situations are easily preventable by a Procurement system that is designed to not only enforce compliance, but make it easy. To find out how, check out Sourcing Innovation’s New White Paper on The Procurement Marketplace and the Power of Compliance (registration), sponsored by Vinimaya.

The Procurement Marketplace and the Power of Compliance

When it comes to Procurement, compliance is very important.

  • Non-Compliance with contracts is the biggest reason that 30% to 40% of negotiated savings never materializes.
  • Non-Compliance with standards and regulations often results in poor product quality, unusable inventory, or, even worse, seizure of goods by customs.
  • Non-Compliance with insurance and financial regulations could leave you on the hook for million dollar lawsuits and your CEO and CFO on the hook for criminal charges.

Compliance is also very hard to enforce in the average organization because your resources, time, and visibility is limited and it’s easy for anyone and everyone to fly under the radar whenever and however they want to.

But there is something you can do about it.

The Power of Compliance To find out, join Sourcing Innovation and Vinimaya at 13:30 PDT / 16:30 EDT / 20:30 BST this Thursday, October 16 for our webinar on The Procurement Marketplace and the Power of Compliance, hosted by Don Carrington and the doctor, where we will fill you in on how you can go about improving your organizational compliance.

Attendees will be the first to receive Sourcing Innovation’s New White Paper on The Procurement Marketplace and the Power of Compliance. Register now for The Procurement Marketplace and the Power of Compliance and get a leg up on your competition!

Savings Are Disappearing, Cost Are Risings, and Value is Vanishing. Is Your Procurement Infrastructure to Blame?

A recent 2013 CPO survey from Deloitte reported that only 61% of organizations are somewhat effective at delivering value for stakeholders. There are a number of explanations for this, but the most prevalent reason stated was a lack of business alignment.

In addition, 79% of CPOs consider cost reduction to be their primary goal. There are various reasons for this as well, but a common reason, cited in multiple studies, is a lack of focus around demand management.

Not only did Aberdeen echo this focus on cost in their recent publication on the Top Three Supply Chain Execution Priorities for 2014, but they also indicated that the most critical strategic action for Procurement is to improve internal cross-departmental systems, process collaboration and integration and to align the Procurement strategy with organizational goals.

If you put all of this together, it tells a story. The organization is still seeking cost savings because potential savings opportunities are not captured. There is a lack of compliance with contracts and purchasing policies. The potential cost savings are not captured because demand is not properly managed, despite best efforts. Users are not buying the right product, not buying from the right supplier, not buying at the right price, and/or not buying at the right time (and incurring extra costs by way of expedited shipping). There is a lack of visibility into true demand. This lack of demand management is partially due to the lack of an aligned Procurement strategy consistent with organizational goals — and the lack of alignment is largely due to a lack of actionable intelligence.

In other words, many Procurement organizations, including those with (relatively) modern eProcurement or eSourcing software solutions are blinded by a lack of visibility, hindered by the absence of a platform that supports actionable intelligence, and still challenged with achieving basic contract compliance.

A key part of the solution is missing. Specifically, it is the part that provides visibility into the organization’s real buying behaviour.

So how do you fill the gap? You acquire a Procurement Marketplace that provides users with visibility into policies, contracts, and goods and services readily available for consumption and purchase.

What does such a solution look like?

The Power of Compliance Join the doctor of Sourcing Innovation and Vinimaya at 13:30 PDT / 16:30 EDT / 20:30 BST one week from today on Thursday, October 16 for our webinar on The Procurement Marketplace and the Power of Compliance where we will discuss how a modern Procurement Marketplace can significantly reduce the 30% to 40% of negotiated savings that disappears every day when buyers buy off-contract and incorrect invoices are overpaid.

Attendees will be the first to receive Sourcing Innovation’s New White Paper on The Procurement Marketplace and the Power of Compliance.  Register now for The Procurement Marketplace and the Power of Compliance and get a leg up on your competition!