Category Archives: Market Intelligence

So, What Makes A Procurement Pro?

There are many articles on this issue across all Procurement sites, social media sites where Procurement Pros gather, and even major FinTech publications. And have been for years.

If you search for the skill sets that make a Procurement Pro, you’ll likely find a list that contains ten or more of the following 30 (thirty) skills:

  • strategy
  • tactics
  • supply management
  • negotiation
  • contract management
  • great listening
  • convincing speech
  • teamwork / team management / team motivation / team spirit
  • problem solving
  • spend and process analysis
  • big picture planning and delegation skills
  • supply chain and cross-functional awareness
  • leadership
  • high EQ (emotional quotient)
  • high TQ (technical quotient)
  • process management
  • should-cost modelling and price analysis
  • supplier selection
  • supplier management
  • relationship management
  • market research
  • risk management
  • stakeholder management
  • collaboration
  • strategic sourcing
  • regulatory knowledge
  • demand planning
  • customer service orientation
  • sustainability
  • decision making

And while classically this was a pretty good foundation, in this unstable world full of marketing hype, some new skills are needed and some old skills need upgrading. The following five in particular come to mind:

  • lie detector and hype buster: every vendor lies, and your ability to detect the extent of their lies is key — what’s the quality on the delivered goods vs the sample, how much can they actually produce in a given window, how long will delivery actually take, can they really afford to maintain the quality at the price they bid; and when it comes to software vendors — how many of their claims are really in production, how long will implementation and integration really take, and how responsive will their support actually be; and when it comes to AI marketing, they cut through the hype to what the tech can really do, which is a fraction of what the vendor claims
  • foundational mastery: a true Procurement Pro is one that understands the function and core processes at the core and can execute them all with nothing more than a pencil, paper, and telephone; in a world dependent on tech, a true tech master is one that understands how to get by without the tech; only that person can master the use of the tech in their daily job as well as keep moving forward when the tech inevitably fails; for all its power, a single EMP or massive grid failure can take down a data center and all your tech with it (and a massive solar flare, which happens every few hundred years can manage that)
  • crisis predictor: it’s not just risk management, it’s global situation monitoring and crisis prediction — will escalating political tensions result in conflict, war, or border closings; will severe weather or drought conditions limit or cut off trade routes; will rapidly rising oil prices or insurance rates result in a number of critical carrier bankruptcies; etc.
  • change master: the core of Procurement never changes; it’s purpose today is the same purpose it was when formal trade first began thousands of years ago; but the processes, mechanisms, and technologies that are used to conduct it are in constant flux; as are the availability of sources, partners, channels, and customers as many economic and geopolitical factors are in constant flux; a Procurement Pro needs to be able to constantly adapt and regularly do so mid-process
  • terminator: every business and department is great at starting things, but no one ever wants to end things — sometimes the best thing you can do is end things that are taking up too much time, energy, or money compared to the value they are delivering

In other words, the classic skills are a good start, but the modern world, and the business environment that has evolved, demands another layer on top of those classical skills to thrive.

Is your Procurement Leader ready?

What e-Sourcing Is Not – A Necessary 7-11 Update!

Twenty years ago we wrote a post on e-Sourcing Resistance and what e-Sourcing is Not. In that post, we began by referencing “The 7 Myths of e-Sourcing” by the great Tim Minahan (before he went over to the dark side), where he tried to dispel the myths.

Since the original myths still persist today, we’ll start by reminding you of those — and then address the new myths that have arose / are arising so you don’t lose the path.

Tim’s Original 7. e-Sourcing is NOT about

  • lowering prices: it is about getting the best, fair, price you can get on a product, or service that meets your needs, but not about squeezing supplier margins so thin they go out of business
  • unfairness to suppliers: it’s not about forcing out or limiting to preselected suppliers, but creating an open, level, fair playing field
  • unfairness to incumbents: it’s not about forcing incumbents out, it’s just about ensuring they also play on a fair, level, playing field
  • keeping suppliers out: it’s not about making business more difficult to win, but easier to win
  • sales cycle lengthening: it’s about making sourcing processes right-lengthed
  • supplier burdening: it’s not about adding costs, technology, or resource requirements — but minimizing the burden on the supplier
  • eliminating relationships: it’s about finding the right supplier to build a relationship with

but with the rise of technology, and, AI, in particular, a new set of myths has arisen and needs to be dispelled ASAP. E-Sourcing is NOT an excuse to:

  • turn every Procurement event into a(n) (e-)Sourcing Event: just because you can, doesn’t mean you should … most procurements should be off existing contracts, most tail-spend should be spot-buys, and when the volume/cost is enough, simple RFQs; e-Sourcing is for goods and services that are strategic or custom, not tactical or commoditized
  • use AI to draft RFPs: with AI, you can draft RFPs, and incorporate as much as you want into those RFPs, and ask as many questions about as many things as you want — this might make your life easier, but it unfairly burdens suppliers when you ask for details you don’t need (at least until you are going to seriously consider them) — plus, AI will hallucinate, ask wrong questions (and then force a follow-up request later when it’s discovered) and waste time on both sides … RFPs need to be human drafted — they should be based on templates (and assembled using non-LLM AIs), and AI should be used to judge completeness, clarity, etc — and even recommend gaps to fill in (because, when well trained, 90% accuracy can be useful), but AI should never lead
  • use AI to conduct events agentically: AI should be used to automate the tactical, but humans need to be engaged at every decision point
  • use the same process for every event: some events should be simple one-shot mini-RFPs just to verify key product/service requirements; some events should be moderate two-stage RFI/RFPs to ensure the suppliers meet mandatory organizational requirements; others deep three-stage RFI/RFP/RFQ processes to first verify suppliers, than products and services, then BAFO pricing so complete information is known before a decision is made

e-Sourcing is about right-sized efficient execution of strategic sourcing events for both sides, nothing more, nothing less.

The New Market Dilemma IV: Buyers Still Win the Battles!

Vendors and Consultants are but a small portion of the industry, and the economy … as Buyers, you work for organizations that compose the majority. The only way we’re truly going to get back to business-as-usual is if you use the vision provided by the vendors looking ahead to solutions (and not looking back to outdated manuals or just offloading their work to hallucinatory Gen-AI LLMs) to identify what clarity you need, bring in consultants to help you realize it (and the significant ROI that accompanies it), and then use your newfound “savings” to procure the best-of-breed sourcing, procurement, and supply chain visibility technology offered by the visionary vendors, as this is the technology that will help you increase productivity and significantly reduce your costs across the board and survive the AI Hype Induced Market Crash to come.

We don’t know how bad the crash is going to be, and it might be a long road to recovery that requires a significant effort and initiative on your part (depending on the size, complexity, and focus of your organization), but the starting point is clear. So here’s a simple step-by-step guide to get you on the right path.

  1. Do a real process and spend analysis.
  2. Bring in process and category experts to get you real time savings on your most time-consuming processes and your most profitable tier-1 categories.
  3. Implement workflow and process orchestration and e-Procurement systems to realize the savings.
  4. Adopt e-Sourcing to streamline and maximize the savings potential on your tier-2 categories.

REAL ANALYSIS

We’re not talking about a simple time tracking exercise on a step-wise basis based on progression points, we’re talking about real end-to-end process analysis in terms of how much actual human time is spent on each step (not just when the steps happen), why, if the process can be redesigned to take out the time-consuming steps, and, if not, if the steps can be redesigned to take less time. It’s about real efficiency, not just a bit of streamlining with thoughtless automation.

And we’re talking about real spend analysis — not just loading your AP data into a UNSPSC cube and running out of the box reports on your top 10 vendors, top 10 categories, and top 10 departments. Even if you don’t know the exact amounts, a simple internal survey will tell you those with uncanny accuracy. And it’s definitely not throwing random spend data into your LLM of choice and asking for it to find “savings”. That’s just going to run the same dumb reports and give you the “obvious” recommendations that you already know, and that for one reason or another, you can’t do because of existing contracts, specific product needs, etc.

We’re talking about loading all of your spend-related data -— AP, Invoice, Contract, Third-Party Price Indices, etc. — in a real spend analysis product that will let you slice and dice it any way you can think of so that you can identify (a) where you have made overpayments and extract refunds and (b) identify the top categories with with the most savings potential. If you haven’t done this before, you’ll want to bring in an expert. There are a few providers in this space that typically find tens of thousands, and sometimes hundreds of thousands, and occasionally millions, of dollars in overpayments within a day. The ROI is well worth the investment.

CATEGORY EXPERTS

This is especially important in categories like energy, telecommunications, utilities, and SaaS that require significant expertise that you might not have. While you might be able to negotiate a 15% cost decrease in a buyer’s market if you’re well informed, a seasoned veteran who has been negotiating these deals day in and day out for a decade (or two) will find a way to save you 30%. And when many of the firms will work on contingency, i.e. you don’t pay until the new contract is cut for an amount less than what you’re paying now, the ROI will be significant.

IMPLEMENT MODERN E-PROCUREMENT

Up to 60% of negotiated savings never materialize at many companies. If you don’t implement state-of-the-art end-to-end e-procurement systems orchestrated with your sourcing, supplier, and supply chain solutions, with price control capabilities (contract integration, punch-out price verification, authorizations for off-contract spend), you too could lose 60% of the savings you negotiated.

ADOPT NEXT GENERATION E-SOURCING

While you’ll still want to bring in the big-guns for the big savings opportunities, as the ROI will be many times what the big-guns cost you, there will be a large number of tier-2 categories where the savings opportunities, though substantial, won’t be as significant if you have to pay high-powered consultants. These are the categories where you get your best returns if you can run the events quickly, and efficiently, in house. And this is what modern e-Sourcing execution platforms allow you to do … especially on categories where you need to go back to market regularly because the volatility is too high to risk long term contracts.

The key is a modern sourcing execution platform that will let you incorporate the right amount of automation, market intelligence, optimization, analytics, and suggestion. It’s all about allowing the buyer to spend just the right amount of time to extract the value and not a second more.

The New Market Dilemma III: Consultants Need to Provide the Clarity

Just like vendors need to stand up and provide a real vision (and not AI hype), consultants need to sit down (with executives) and provide the execution clarity that will get buyers on the fast-track to procurement, organizational, industrial, and economic success. More specifically, at this time, they need to:

  • Focus on a Niche (as you can’t be experts in everything)
  • Establish Thought Leadership (not regurgitated AI hallucinations)
  • Create Brand Awareness (for you and for the client)
  • Outline an Organizational Path for Long Term Success (not just short term billing)

Focus on a Niche

In the market to come, failure is not an option and no one will want an old-school consultant who says “yes” first and figures it out later. Identify what you’re good at, how you can deliver significant value, and, more importantly, how you can identify significant value now. In the market that’s coming, sound long-term planning tends to fall by the wayside, so even though it’s the most important thing a company can do, chances are, they’re only going to spend on short-term initiatives until you prove that you can deliver the goods.

Establish Thought Leadership

There are hundreds of other consulting providers out there. If you don’t believe me, just ask your favourite AI Engine to give you 100. Why should they use you? How do they know that you know your stuff? How do they know that you’re on a path of continual improvement? How do they know that you’re focussed on being the best? If you don’t establish thought leadership, they don’t … which means that your only chance of success is if the other firms the customer is considering also don’t have any thought leadership and you want to compete on price, not on value.

Create Brand Awareness

Contrary to popular belief, you have to market, market, market. You need permanent brand visibility so that when people have a problem in your niche, they call you. This doesn’t mean expensive print ads in magazines no one looks at (despite impressive sounding circulation numbers), this doesn’t mean sponsoring expensive analyst reports year after year (especially considering that the vast majority of the A-level analysts are now long gone from the big firms), and it doesn’t mean hiring a VP of Marketing who’ll come in, use up a lot of your budget, and recommend the same-old same-old that didn’t work at the last company he was at. What it does mean is that you need to tap into the channels where your customer base already is. Speaking engagements at key low-key events (not overpriced, nosiy, trade shows with too many vendors and too little content), sponsored educational webinars for appropriate professional societies, and, most importantly, the independent educator sites (blogs, podcasts, video content) where educated, innovative, progressive buyers go for information and illumination on a daily basis.

Outline an Organizational Path for Long-Term Success

Although you need a quick-hit ROI niche to get that initial engagement, you don’t want to be seen as a one-trick pony. It’s important to have a plan that will allow you to guide your customers down a recovery path that will take them to their long term success.