Category Archives: Orchestration

2023 was the year of Intake. Will 2024 be the Year of Orchestration?

Orchestrate the feeds
Pave the way for meeting needs
Phase one is initiated,
there’s no more paper chase, eh?
Set the space ablaze
Case closed, we did rephrase
Workflows for phase by phase
Gets you through the hard days

To the tune of “Orchestrate” by Eliozie
(Outtro NSFW)

2023 may have been the year of Intake with Zip raising 100M to do Procurement intake management for the layperson, but 2024 will be the year of Orchestration. The reason is that while it’s great to manage intake and give the organizational end-users and stakeholders insight into where their request is in the process at all times, allowing them to interact with Sourcing and Procurement where needed, it’s even greater to give Sourcing and Procurement the orchestration engine they need to get their job done and fulfill those organizational requests efficiently and effectively – across people, processes, and platforms.

With so many challenges for an average buyer to fulfill a request from an organizational employee or stakeholder:

  • identify potential suppliers
  • identify potential products
  • verify products
  • for suppliers not onboarded, verify supplier eligibility for onboarding
  • onboard the required suppliers for the sourcing event
  • conduct the sourcing event
  • identify the winner
  • conduct negotiations and …
  • collaboratively develop a contract for signature
  • (e-)sign the contract
  • identify and track the performance obligations
  • identify and track the compliance obligations
  • import the pricing into the e-Procurement system
  • send out the (first) PO
  • track the order acknowledgement and the shipment
  • ensure and record delivery
  • etc. etc. etc.

Doing all of this often involves

  • using a third party supplier discovery service to identify potential solutions
  • searching product specs in a third party marketplace that integrates with your catalog management application
  • using a TPRM (third party risk management) to make sure the supplier doesn’t have any obvious red flags
  • onboarding the supplier in your supplier management solution to collect organizational specific data requirements in order for you to potentially transact with the supplier
  • switching to an e-Sourcing tool to do the RFP/RFQ (as appropriate)
  • running a (weighted) analysis on the bids to select a winner …
    possibly in an analytics solution
  • conducting negotiations in a negotiation management tool (that may or may not be integrated with the CLM)
  • managing the contract drafting processing in the CLM
  • … and the signing in the e-Signature tool
  • and then run the the contract through a contract analysis solution to push the performance and compliance obligations into the governance module
  • … and extract and push the pricing into the e-Procurement system(‘s integrated catalog)
  • … where the PO is cut and the Ack received before …
  • they have to manage the invoice in the I2P (Invoice to Pay) / AP (Accounts Payable) system as well as verify the goods receipt
  • etc. etc. etc.

Furthermore, even if the organization has a “suite”, chances are it’s not that “sweet” and many of the core modules aren’t tightly integrated (as most of today’s S2P “suites” were assembled through acquisition and while the UX has been cleaned up to look consistent at first glance and there is some “endpoint” integration, chances are that it’s minimal data push and pull between process endpoints). It’s also often the case that if the required workflow doesn’t exactly match a very specific use case, the integration just doesn’t work seamlessly and it’s a lot of effort. That’s for the modules in the suite. Not all modules are in the suite. Most suites don’t have full TPRM, extensive compliance management, negotiation support, inventory management, etc. and that is through non-integrated third party solutions. A simple process that should take a few hours of effort to check all the boxes can take days of effort as buyers have to switch between multiple systems, check status, re-enter data, switch back to the intake platform to update the requester, make changes, and so on. Just like the introduction of “modern solutions” has taken onboarding from a 2-day fax and email process to a 2-week gated process with multiple, disjointed, approvals, the proliferation of disjoint, specialized, Source-to-Pay-Plus solutions has taken simple processes that take hours of person-work and days in real-time to complex processes that take days of person-work and weeks in real-time.

The solution? Procurement orchestration. Something that integrates, to the extent possible, all of the modules together in the right process with the right steps in the right seamless flow that requires any piece of data to be entered once and only once in a consistent user interface … and works for all parties, the requester, the buyer, and any stakeholder involved in the process.

There are Three Primary Parts to Procurement Orchestration

Procurement Orchestration is the craze, presumably because Procurement shouldn’t operate in a vacuum. There are a number of startups just focussed on orchestration, a number of analyst firms are jumping on the orchestration bandwagon, and a number of enterprise automation platforms are all of a sudden claiming to be procurement orchestration platforms to get in on the buzz. But there’s a lot more to Procurement Orchestration than just application automation. A lot more.

Procurement Orchestration, which we included in our 39 Part Series to Help You Figure Out Where to Start with Source-to-Pay in Parts 34 to 36 and 39, MUST Address, at a minimum, the orchestration of:

  • procurement data
  • procurement process
  • procurement stakeholders

First of all, good Procurement needs to be data-informed. (Not data driven, data informed. Data driven means that all decisions based on the available data, which is never complete. You can accurately capture all bids in an RFP, previous OTD metrics, previous defect metrics, subjective quality ratings, ESG data, etc. but you can’t capture relationship data, innovation support, etc. and these are also factors that are important in Sourcing and Supplier Selection.) This means that all available data needs to available to the Procurement team. It doesn’t have to be centralized in one system or pushed to a data warehouse / lake / lakehouse, but the source system (that holds the golden record of truth) for every piece of data needs to be identified and integrations created to allow the necessary data to be accessed as needed by the Procurement system currently being used.

Secondly, good Procurement needs proper processes. That’s more than just application orchestration as not all Procurement teams will have applications for every step of the process, and even those that have major applications for every major stage (intake / need identification, spend analysis / opportunity / procurement process identification, sourcing, supplier onboarding / management, contract negotiation and governance, e-Procurement/PO Generation and Management, Invoice Management and OK-to-Pay) will still need to orchestrate intermediate process steps such as stakeholder collaboration, external vendor risk/ESG review, etc.

Thirdly, good Procurement needs to involve all of the relevant stakeholders. The category manager, the risk manager, the budget holder / executive, the in house counsel, etc. All of these individuals need to be able to interact with the procurement process and artifacts at the right time, and through their applications if they have special tools to do the risk analysis, budget analysis, contract review, etc. Thus, supporting procurement goes beyond just supporting procurement applications and processes, but peripheral applications and processes as well so that all stakeholders can be part of the process and effectively contribute their expertise and experience.

Remember this the next time a jazzy tool tries to lure you in with pre-built Procurement platform integrations or easy, visual, procurement workflows. That’s just part of the puzzle.

Procurement Automation: Good. Automated Procurement: Bad.

We shouldn’t have to say this. It should be very clear by now. But given that a number of vendors are using the terminology interchangeably, possibly to convince you they have the right solution, maybe it’s not clear. But it needs to be. Because procurement automation is NOT the same as automated procurement and while procurement automation, properly done, is the best investment an average over-burdened and under-resourced Procurement department can make, on the flip side, AI-driven automated procurement is the absolute worst. To put things in perspective, downgrading Excel to Lotus 1-2-3 would be a better move. But let’s back up, and start with some definitions.

Procurement Automation is the process of automating certain procurement tasks that can be best accomplished by machines and procurement automation technology is the technology that automates the tasks that can be best done by machines. In simpler terms, it automates the “thunking” by doing all of the tactical, almost mindless, work that is a waste of a senior Procurement professional’s time.

The Source-to-Pay cycle is full of tasks that are best done by machines when appropriate rules and boundaries are defined. For each major area, we’ll outline some of these tasks as an example.

Intake/Orchestration

Procurement Automation will analyze the request, identify similar requests made in the past, identify the actions used to resolve those requests, identify the suppliers considered and selected, the products and services used, and other information. It will present that information to the buyer, including the suggested actions, and allow the buyer to one-click initiate any of the suggested actions, which might include a sourcing event, contract renegotiation, catalog purchase, etc.

Sourcing

Procurement Automation will, when a user kicks off a sourcing event for one or more products, automatically bring up the suggested suppliers, automatically suggest the appropriate questionaries and forms, automatically suggest the appropriate Ts and Cs to insist on up front, automatically send the RFP to suppliers, automatically analyze the responses to make sure they are complete, in the correct format, and in an expected range; automatically compare the responses to find deviations from the norm; automatically highly the lowest and highest costs, CO2 factors, etc. and present all that information to the buyer.

Supplier Management

Procurement Automation will, when a supplier is selected, automatically handle the onboarding; monitor the data for changes; monitor the performance metrics; monitor the OTD; monitor third party financial and risk metrics; and alert the buyer to any issues and performance changes that are detrimental or may indicate forthcoming problems.

Contract Management

Procurement Automation will, when an award is selected, push the award into the Contract Management system, automatically generate the draft contract, send it to the supplier, highlight any redlines the supplier makes when it comes back and automatically inform the supplier if any non-negotiable terms and conditions (including those they agreed to when they responded to the RFP), and automate the generation of the response email when the buyer does their redlines.

e-Procurement

For catalog buys, it will automatically generate the POs, route them for necessary approvals, distribute them to the suppliers when approved, automatically match the ASNs when they come back, alert the buyers if ASNs are not received in a timely basis, and match the invoices when they come in.

Invoice-to-Pay

When the invoice comes in, it’s automatically matched to the purchase order, it’s checked for price accuracy, identified as partial or full, verified to be non-duplicate, and if any checks fail, it’s bounced back to the supplier with a description of the issues and a request for correction and resubmission. If the resubmission deals with the problems, it’s queued waiting for goods receipt/confirmation if not present, or matched if present. If the match is made, then it’s automatically sent down the approval chain, and if it’s not made within a certain time period, an alert is raised.

In all cases, it’s automating the tactical tasks that don’t require any decision making and only involving the human when necessary.

In contrast, Automated Procurement is the process by where entire procurement processes are handed over to the machine to fulfill instead of the human. In other words, when an intake request comes in and the buyer marks it for sourcing, an Automated Procurement solution will handle the entire event up to and including the award and auto-generate and distribute the Purchase Order(s). The buyer is completely bypassed and the right inventory showing up at the right time at the right price is left entirely up to the machine. Sounds good in theory. Looks good in practice when it actually works, which it will some of the time. But grinds the company to a halt when it fails.

A machine that pursues lowest cost will select an unproven non-incumbent supplier for a critical part when the suppler, who has not supplied that particular part to the company before, outbids the incumbent. It will not detect that the bid was made in an desperate attempt to help the financially struggling supplier stay in business, that the bid is not sustainable, and that the supplier is not capable of producing the part at the indicated level of quality. Then, when the first shipment is mostly defective, and the promised rush replacement order never arrives because the supplier goes out of business, the production line for the 75K luxury car folds all for lack of a single control chip. (A similar situation has occurred in the past. Recently, chip shortages stopped Cherokee production in 2021, and that wasn’t the first occurrence. Or even the second, or third.)

Machines are not intelligent. Not even close. And expecting them to make a good decision every time with no logic whatsoever (as modern Artificial Idiocy algorithms just stack probabilistic equations on top of probabilistic equations almost ad infinitum) is lunacy. So while you should invest in the best Procurement Automation tech you can get your hands on, you should steer clear of any and all Automated Procurement Solutions those fancy new startups try to sell you. While those solutions may work 90% of the time, that last 10% of the time, they won’t work that great. And, in particular, that last 1% of the time they will fail so miserable that the disruptions and losses that result will more than cancel out any and all savings and efficiencies you might get from the 90% of the time the tech worked in the beginning.

Source-to-Pay+ is Extensive (P39) … DeObfuscating the Orchestration – Fitting it all Together

In our three installments last week (Part 34, Part 35, Part 36) we noted that, when you are in Sourcing/Procurement, you need to intake requests, manage projects, and/or orchestrate your technology-enabled processes, depending on what the modules/suite you have do and don’t do and what your particular situation warrants. However, we also noted, that you won’t find a single platform that does everything you need to do, and you’ll be lucky to find a platform that does even half of it. And even then, it probably won’t do more than half of that well. That’s because, as we explained, these emerging platforms typically fall into the categories of Intake Management, Procurement Project Management, or Orchestration. In Part 35 we overviewed the core capabilities at a high level, but skipped the deep dive in an effort to get you the fledgeling vendor list (which is still quite small) so you could start getting familiar with who is out there and have an idea who to investigate when the time is right.

However, once you get a shortlist, you need to be able to evaluate where the platform is now relative to where it should be and what you will need. Thus, in this installment, we are going to continue our dive into each of these three product classifications (which, hopefully, will someday become one as you need all three sets of capabilities for successful orchestration). We’re concluding with Orchestration, because once you have accepted the request and defined the project, you need to execute it.

Orchestration is, in essence, the integration of as many modules as you need into a configurable workflow that suits your specific organizational processes for the procurement at hand.

Easy Self-Serve Data Stream / Partner Module Integration
A buyer should be able to select the supported applications that they own, enter their license codes, and it should automatically integrate with the orchestration tool. It should be a single click to integrate a supported data stream (once purchased).

Low-Code Integration for Arbitrary Source to Pay+ Modules
It should be almost as trivial to integrate non-partner source to pay modules which have a well-defined (open) API simply by defining the API link, the buying organization’s unique keys, data mappings from the orchestration platform to module data tables/objects, entry and specific task links, etc. that is sufficient for pulling data from preceding modules into the application, pushing data out required for metrics and successive modules that are required in the procurement process, launching the application, quick-linking to a specific screen, and integrating the module into the appropriate process workflows.

Workflow Automation
The entire idea of process orchestration is to support the right workflows to support the various sourcing, contracting, onboarding, procuring, payment term analysis, and other source-to-pay projects the procurement organization needs to undertake. It should fully automate the workflow defined in the intake module and/or the project defined in the procurement project management platform.

Smart Progress Tracking
The orchestration module should automatically track where every single process is and when a buyer comes in, take the user to the right screen corresponding to the current step of each procurement process it is managing. It should also push the required data for process and project tracking into the intake and procurement project management modules that will allow those platforms to automatically track the current project process.

Effectiveness KPI Tracking
Whereas a procurement project management module should track the efficiency of the procurement projects, orchestration should track the effectiveness. For a sourcing project, what was the identified savings? (It should track the prior cost per unit, the estimated demand for the next year & contract term, and the identified cost per unit.) For a contract renewal, what were the cost/service/quality/etc. gains? For a catalog procurement, what was the cost savings over the prior (non-catalog) procurement? For an analysis, what opportunities were identified in what time frames? And so on.

Predictive Analytics Integration
The platform should be capable of integrating with a platform capable of doing predictive analytics around expected process times, expected performance (savings, etc.) outcomes, and other metrics the user might want to consider before kicking off a project.

Rule-Based Automation
The platform should support rules-baed automation that will allow parts of the process to be fully automated within certain constraints. For example, if it’s a sourcing project, the RFQ, once defined, can automatically go out to approved vendors, when the quotes are returned, the lowest cost quote(s) accepted, the contract draft auto generated, and so on.

Data Flow Definition
It should be trivial to define the data flows between the different source to play modules that will be used in a given procurement process.

This completes our deep-dive of the intake management / procurement project management / orchestration modules that exist today, and that we listed in Part 36.

Source-to-Pay+ is Extensive (P38) … Prettying Up the Project with Procurement Project Management

In our three installments last week (Part 34, Part 35, Part 36) we noted that, when you are in Sourcing/Procurement, you need to intake requests, manage projects, and/or orchestrate your technology-enabled processes, depending on what the modules/suite you have do and don’t do and what your particular situation warrants. However, we also noted, that you won’t find a single platform that does everything you need to do, and you’ll be lucky to find a platform that does even half of it. And even then, it probably won’t do more than half of that well. That’s because, as we explained, these emerging platforms typically fall into the categories of Intake Management, Procurement Project Management, or Orchestration. In Part 35 we overviewed the core capabilities at a high level, but skipped the deep dive in an effort to get you the fledgeling vendor list (which is still quite small) so you could start getting familiar with who is out there and have an idea who to investigate when the time is right.

However, once you get a shortlist, you need to be able to evaluate where the platform is now relative to where it should be and what you will need. Thus, in this installment, we are going to continue our dive into each of these three product classifications (which, hopefully, will someday become one as you need all three sets of capabilities for successful orchestration). We’re continuing with Procurement Project Management, because the next step is to manage the project, which could go beyond the existing source to pay modules the organization currently has.

Procurement Project Management is exactly what it sounds, the project management of a procurement. It’s essentially project management, tweaked to support Procurement vs. just a generic project. Whereas intake has capabilities for the buyer and the stakeholder, project management is primarily geared towards the buyer.

Phases, Milestones, Tasks, Owners, Obligations, Tracking
The ability to create phases, milestones, tasks, owners, obligations, and track progress throughout the project timeline — all the standard project management functionality — as previously indicated, is a core must. Basically, anything you would expect any other project management tool to do — including team management, GANTT charts, etc. etc. etc. must be supported.

Standard Project Templates
Just like intake management must support Sourcing / Procurement Workflow Process Definition, the procurement project management module must support the definition of standard project templates for each of these processes such that there is a template for every category of good and service being sourced that can quickly be instantiated as needed for each procurement project undertaken.

Customizable Approval Flows
Depending on the category, the amount, the vendor, etc. etc. etc. the approval flow that is required may be slightly different from the default flow for the category, good, amount, vendor, etc. The module must support the definition of the customized approval flow, which can be role based, user specific, or both; parallel, serial, or both; or even process step dependent. And this approval flow must be seamlessly embedded in the project workflow, ensuring that a project does not advance when one or more approvals are needed.

Deep links into Sourcing/Procurement Products
If the procurement project management module is not capable of being integrated into the modules and tools used to execute the project, it’s not procurement project management — it’s just a regular project management tool and you might as well use the cheapest freeware/shareware project management tool that you can find as it’s not providing any value from a Procurement perspective. It must support integration into the modules that are used to execute procurements, and not just a shallow link. It must support a deep link directly into the current screen that represents the current step of the process. It must also support data pulls for metrics, alerts, and necessary pushes into subsequent modules and steps.

Dynamic Project Shifting
If, at some point, the buyer decides that the procurement should follow a different process, or, due to quotes (and likely costs) being higher than expected, the need to introduce new (potential) suppliers into the process, or the need to accelerate the acquisition, the module should make it as easy as possible to convert the current project plan into the new/modified project plan, by automatically populating the new project plan with all of the existing project configuration that can be reused. Requirements, team members, approvers, etc. etc. etc. that are capable of being ported should be. In addition, it should note that the procurement process was modified and link back to the original process that was followed, and where the buyer was in the prior process prior to the shift.

Efficiency KPI Tracking
The platform must track metrics around how long different processes generally take, down to the individual milestone and step, as well as the configuration settings and parameters (such as category, contract length, etc.) that will allow the metrics to be sliced and diced into specific metrics meaningful for a precise subset of procurement processes.

Issue Alerting / Exception Dashboards
Just like an intake management platform should alert the stakeholder and the buyer when there is a question, issue, or requirement that needs their attention, a procurement project management platform must alert the buyer not only when something needs to be done, but when a certain process step is taking longer than was allocated or than the average process time for that step in similar projects. It must make it easy to see all of the outstanding alerts applicable to the buyer and/or a particular process, as well as any exceptions that arise during a project that could cause a delay, whether or not they are to be resolved by the buyer (so that the buyer can see if they need to contact a stakeholder to see if that stakeholder needs help to keep the project moving).

A good procurement project management module will, of course, do even more than this, but as with all of the previous modules we covered in our series, we consider this the bare minimum set of functionality that a procurement project management module should support.

We still have Orchestration, so come back for Part 39.