Category Archives: Procurement Innovation

iZombie Interlude

In popular culture, a zombie is defined to be a person who has died and been reanimated in a manner that typically causes them to lose intelligence and, sometimes, even, sense of self. Sometimes its because a voodoo doctor or other evil personage re-animated them. Other times its because a virus, often created by a mad scientist, had a very adverse effect and created an infection that spread (like wildfire) and create half-living / half-dead creatures that are, for all intents and purposes, zombies.

But that’s not the only definition of a zombie. Another definition of zombie is a person held to resemble the so-called walking dead, included, but not limited to, an automaton. An automaton that is indistinguishable from a person that repeats the same well-defined tactical tasks over and over again, day after day after day.

A person that, with the right sustenance (brains in popular culture, or coffee and painkillers in others), can actually maintain semblance of self and intelligence, even if such semblance of self and intelligence is rarely seen during the day to day performance of their tasks.

A person that, in all likelihood, works in an organizational back-office job in an enterprise using outdated technology and inefficient processes, like your average Procurement organization.

So, when SI is saying that iZombie is a good name for our profession that was supposed to be dead and buried two years ago, but is still going … on auto-pilot. Automatons we are.

iZombie.

Why?

iZombie: A Prelude Part II

12:59 pm – You settle into your seat in the meeting room, in preparation for an hour of arguing, finger pointing, and general non-performance between the marketing rep, engineering rep, finance rep, and the customer success rep (that represents the account management team).

First off, the customer success rep is p!ss3d that the incumbent supplier, that is supplying four of their five top customers is being invited back as all of the customers are complaining about product quality. The supplier did send out a few bad shipments, but has since re-instituted the mandated quality assurance processes and allowed you to place a quality rep at their site that reports to your organization. Quality has increased to minimally acceptable levels on the last two shipments and things are on the up and up. (But since each customer only gets a shipment every three months, those four customers didn’t get their yet, scheduled for the next two batches.) And the customer success rep would know if engineering had a way to update them.

Next up, the finance rep wants to know why the two lowest bidders have been disqualified because the organization needs to lower costs by 10% and those are the only two suppliers likely guaranteed to do so on the project. It’s pretty obvious why based on the product ratings from engineering and customers and the historical quality ratings across projects, but apparently finance couldn’t be bothered to figure out how to run the reports.

Then the engineering rep wants to know why they can’t just keep using the incumbent, who has already agreed to a 5% price reduction to make up for their quality failure. Especially since Engineering put all this time into qualifying them and building the relationship. (Unaware that this supplier has also performed poorly across sister companies, which you are aware because the PE firm that bankrolls you collects cross-organizational data and builds it into the risk reporting feeds you get monthly — outside the platform.)

Finally, marketing is up in arms that you are not looking for suppliers that can deliver products with new and exciting features they can sell.

Thirty minutes of complaining, ranting, and basic Q&A pass before you can even get down to business.

The RFP was scheduled to go out today, on final review, but the supplier list has yet to be approved, hence the reason for this after-the-last-minute meeting. The incumbent supplier, three previous bidders, and six potential new bidders were invited to the RFI, two new bidders didn’t respond, and two didn’t meet the quality cut. You were ready to send it out to six, but customer success still feels their grievances haven’t been heard on the incumbent, engineering says they will disqualify the previously invited bidders for the same reason, and finance feels the two new suppliers, based on their bids in other projects, won’t be competitive.

Finance wants more suppliers, you need suppliers engineering will consider, and without at least one supplier that tickles marketing, you’ll hear nothing but moaning for months.

So you need to do another discovery project. There’s another 20 hours and 2 more weeks down the drain. And an addendum to the report you just gave your boss less than two hours ago – damn!

Anyway, that’s tomorrow’s project. The meeting has ended, and you have 30 supplier e-mails that you need to review today, or you know they will be repeated tomorrow — plus, one ranting and raving phone call a day is enough.

2:10 pm – Into your tenth supplier e-mail, most inquiring about invoices, event status, etc. — and other inane questions that could be answered through their supplier portal, as awkward as it may be, if they’d just learn to use it, you hit an e-mail from your key widget supplier informing you that the shipment that was supposed to go out yesterday is not complete as they have been waiting on a steel shipment for two weeks. Yikes! If you don’t get widgets in 21 days, your production line grinds to a halt! That will cost the company millions.

3:45 pm – After an hour and a half of frantic calls, you find another — off-contract — supplier that can supply a substitute shipment of widgets that, while not preferred, will work with a few minor production line tweaks and keep you going for six more weeks. If you can’t get regular shipments out of your supplier within that timeframe, you’ll be in trouble. But that’s tomorrow’s problem. For today, you still have 20 supplier e-mail and almost two dozen stakeholder e-mails to get through.

4:25 pm – The remaining supplier e-mails are not critical, a few require clearing up with AP and engineering, but that can be taken care of later in the week.

4:35 pm – Most of the stakeholder e-mails are answers to your inquiries, inquiries as to why Sourcing takes so damn long, or indicates of delay. The usual affair. Time to do a quick check on existing project status.

4:50 pm – Three projects need addressing in addition to the cog project. The axle project has questions from suppliers that need to be answered so they’ll bid. The cylinder project still needs RFI scoring from stakeholders so it can go to auction. The support team project needs more bids for key contingent workforce roles and you don’t understand why your chosen providers aren’t bidding. Fire-fighting for the next few hours.

7:15 pm – You finally get all the questions answered in the axle projects — and hopefully the suppliers will bid in the next few days; you send reminders to all the stakeholders and leave the ones who don’t read e-mails voice mails; and you call all of the contingent workforce providers in the earlier timezones where they are still in the office and discuss how important it is that they bid on the current project if they want to continue to bill you, and most agree to provide more bids tomorrow.

No real progress on anything, but you made it through today.

7:20 pm – You exit the building.

7:21 pm – You realize the headache you obtained during the stakeholder meeting this afternoon is now, as usual, unbearable so you pop a few extra strength Aleve so you can make make it home, have dinner, and rest up for another day … which likely won’t be that much different from today.

iZombie: A Prelude Part I

8:00 am – You arrive in the office and head straight for the coffee station.

8:02 am – You pour a coffee and head for your deck

8:06 am – You scan your e-mail … 30+ from suppliers, probably all complaints … 20+ from project stakeholders, probably all demanding results without providing any additional information … half a dozen or more from executives asking for update … at least one from your boss and …

8:11 am – Your boss charges in demanding the historical spend report for the sourcing event that’s about to start

It’s in the system, but the system didn’t automatically e-mail it on schedule due to a failed update to of the SSL certificate, but it’s three levels down and requires the application of custom filters which, apparently, only you can find

8:21 am – You’ve finished re-running the report and exporting it in PDF and Excel formats with all the raw data and e-mailing (yes, e-mailing) it to your boss

8:22 am – Back to the e-mail queue … you’re about to open the first one from your boss, just to make sure the report will satisfy her for now and …

8:23 am – Your strategic supplier for a key widget calls … you recognize the number … you have to pick up … they are screaming that their invoice, due 30 days ago, still hasn’t been paid and AP won’t give them any answers … you promise to look into it and get back to them within an hour just so you can put the phone down

9:21 am – You call the supplier back and explain you spent the last hour tracking down the issue. AP refused to talk to you because the head of Finance marked the invoice “Do Not Pay” because Engineering refused part of the shipment and said not to pay until the shipment was replaced. The replacement shipment came with a separate invoice, and although it had the same invoice ID, that was miskeyed to a separate invoice — so AP had no clue the shipment was replaced and Engineering never cleared the issue. But the invoice has been deleted, an accepted shipment been rekeyed to the original, and it’s now in the payment stream to be paid on the next processing date in 5 business days with your boss’s approval. (And she is not happy that you interrupted twice in an hour with the management meetings coming up and her not prepared.)

9:22 am – Back to e-mail. The first e-mail you check was from your boss indicating she needed the spend report first thing this a.m. and the second email indicates she needs a progress report on all of your active sourcing projects by noon. Sh!t!

12:15 pm – You finish that progress report, which first required constructing an updated historical spend summary of the historical spend summary across half a dozen key projects to verify the savings projections against the most up to date spend and current market projections; then required running the metric reports to show that 7 of the 11 projects are on time; then it required that you dig into the final 4 projects and call half a dozen stake holders to find out what the delays were; and then summarize the status, and reasons for, of the final four by hand, compile all the information, and hand craft the one page executive summary that is the only thing all of the C-Suite, will read. (However, the CFO’s underling will spot check 25% of your work, and you don’t know what. So all you can be confident of is that two of the last three hours were wasted.)

You have a team meeting on the new cog project at one, so you decide to duck out to the Taco Truck for a quick bite and some fresh air before the usual screaming match between marketing and manufacturing erupts …

2020 Is Fast Approaching — Better Get on Your Tech Capabilities Part IV

Last week we asked what would you accomplish by 2020, which is less than 16 months away. Between 2008 and 2013, all the big analyst firms and thought leadership vendors painted a glorious picture of where Procurement would be by 2020 — a picture which isn’t even close to being a reality. Simply put, the vendors haven’t advanced technology to the point where it was supposed to be and, as a result, while you got more integrated, streamlined, easier to use platforms with friendlier, and sometimes even mobile, interfaces, you haven’t really obtained new functionality.

By 2020, our software was supposed to be smart. It was supposed to be doing most of our work for us. Tactical procurement was supposed to be a thing of the past. Paperwork was supposed to be over and done with. Data processing and verification automated. And Sourcing was supposed to be smart … not just more functional. But that’s what your average S2P platform is. More functional. All of the great advances we were supposed to have in the average platform aren’t there.

But, fortunately, if you’ll step outside the S2P marketplace and look at the best of breed players, across the entire space, you’ll see that most of the functionality you were promised is there, just in bits and pieces across a dozen or so best-of-breed players. So in addition to:

  • Invoice Automation
  • Supplier Identification
  • Automated Supplier Discovery
  • RFX Process Automation
  • Should Cost Modelling
  • Guided Workflows
  • Automated Spot Buys

What else is there?

Cognitive Buying

This was the holy grail we were promised, but not the holy grail we were delivered. Instead of AI helping us buy better, we are running on glorified decades old tech that just helps out collect data and do tactical paperwork processing faster, but we still have to do all the data collection and review all the paperwork. Even dumb tactical work hasn’t been eliminated in the average platform. It’s no wonder that most people don’t even know what cognitive is.

But there are so many low-value, minimally strategic purchases that need to be properly sourced, and which take up way too much buyer time for the value that is delivered. But if a sourcing system could not only automate most of the work, but make rather obvious decisions based on simple process rules, that could eliminate most of the manual effort. A buyer would only have to review the suggested decisions at key points where there is a shadow of a doubt.

And even then, if there is a high probability a buyer would make a certain decision, why shouldn’t the system make them automatically if the dollar value is low enough, the strategic importance is low enough, or the risk is low enough that the decision doesn’t really need to be analyzed when the confidence factor is high enough.

So how much would you really need to make this happen? Not as much as you think. The core capabilities are:

  • Rules-based workflow
    that allows the sourcing process to be well defined with gated decision-based branching points
  • Should-Cost Models
    that allows the program to compute precisely what the average / expected market cost for the product / service should be
  • Risk Models
    that capture both a product-based risk profile and a supplier-based risk profile
  • Market-Data Feeds
    that contain current raw-material, energy, labour, and average mark-ups for the industry
  • RPA
    that can automate execution of the rules-based workflow based upon automatically derived (and human initiated) decisions
  • Behavioural Modelling
    that can monitor human decisions and actions and learn what a buyer would do under atypical or borderline circumstances
  • Machine Learning
    that will take the outputs of behavioural modelling and human decisions and derive modified rule-based workflows, risk models, and automations to allow more fully automated processes in the future

And if you’ve been following along, you’ll know that there are a number of new best-of-breed systems out there with much of this capability, albeit most providers don’t have this in one system. However, as per yesterday’s post, Xeeva is pretty close. With the exception of behavioural modelling, Xeeva is pretty much there.

But if you happen to be a lucky buyer in electronics, you have a solution that meets all the criteria that goes by the name of LevaData. It’s one of the handful of providers trying to take Sourcing where it needs to be. Like every solution provider mentioned in these posts, they’re another company to keep an eye on.

And this is where Sourcing should be. So why isn’t it?

2020 Is Fast Approaching — Better Get on Your Tech Capabilities Part III

Last week we asked what would you accomplish by 2020, which is less than 16 months away. Between 2008 and 2013, all the big analyst firms and thought leadership vendors painted a glorious picture of where Procurement would be by 2020 — a picture which isn’t even close to being a reality. Simply put, the vendors haven’t advanced technology to the point where it was supposed to be and, as a result, while you got more integrated, streamlined, easier to use platforms with friendlier, and sometimes even mobile, interfaces, you haven’t really obtained new functionality.

By 2020, our software was supposed to be smart. It was supposed to be doing most of our work for us. Tactical procurement was supposed to be a thing of the past. Paperwork was supposed to be over and done with. Data processing and verification automated. And Sourcing was supposed to be smart … not just more functional. But that’s what your average S2P platform is. More functional. All of the great advances we were supposed to have in the average platform aren’t there.

But, fortunately, if you’ll step outside the S2P marketplace and look at the best of breed players, across the entire space, you’ll see that most of the functionality you were promised is there, just in bits and pieces across a dozen or so best-of-breed players. So in addition to:

  • Invoice Automation
  • Supplier Identification
  • Automated Supplier Discovery
  • RFX Process Automation
  • Should Cost Modelling

What else is there?

Guided Workflows

In our last post, we addressed the issue of RFX Automation, how simple it is, but how very few providers have anything close to RFX automation. So you can imagine how much worse the state of affairs is when it comes to guided workflows across S2P. But when it comes to contract negotiations, the back and forth process is quite well defined, the need to automatically compare versions and identify redlines and analyze deviances from the norm is automatic. When it comes to SRM, evaluation processes, disputes, corrective action management, innovation challenges, etc. the processes are all well defined.

But yet, in just about every suite you log into, the guidance is limited to dashboard summaries, task summaries, and alerts. Two decades old technology.

But the best platforms, including a few leading S2P platforms, are allowing buyers to not only build event templates, but embed those templates with rule-based workflows. One of the S2P providers with a single code-base that we have already mentioned a few times, Ivalua, is one provider going down this road. But another provider that has made in-roads is a mid-size best-of-breed provider by the name of Keelvar that is not only one of the handful (less than ten) of providers that offer optimization, but one that is also investing heavily in AI as well.

Automated Spot Buys

How many times do we go to market for a one-off product, service, or temporary provider replacement for a product that is not strategic, a service that is low value, or a new relationship that could be fulfilled by a dozen different providers. And how often is the product or service a commodity, for which market (should) costs are known? And how often do we have approved or pre-qualified suppliers, or processes for automatically approving suppliers? Often.

But this shouldn’t be hard. For commodities, MROs, and standard services, the organization has well defined requirements, known suppliers, should-cost models, market costs, and current supplier risk profiles. And there are well defined processes and rules that the organization follows. And it’s obvious which supplier has the best products, which supplier has the best prices, and which supplier represents the best award under the organizational goals.

So why can’t spot buys be completely automated? There’s no reason they can’t be. The right workflow automation, the right rules, and the right real-time market data is all that’s really needed … because that’s all that an average buyer uses to effect a low dollar or low strategic buy when there is a well-defined process to follow.

But for those organizations that want to take this low-value tactical procurement off of the table and allow their people to focus on higher value strategic activities, there is an answer. One such answer goes by the name of Xeeva. A lesser-known P2P provider that just raised 40M, Xeeva already had the platform, and experience, doing this across a wide variety of low value / non strategic product categories. And now that they have been well funded, this is one provider that should be taking things to the next level.

And that’s not all. Stay tuned as we review our final missing technology and vendor.