Category Archives: Procurement Innovation

Cognitive Procurement is Coming …

But precisely what form will it take?

Over on LinkedIn, the procurement dynamo asks what is the role of machines in the future of Procurement? Why? Because, in some cases, machines are now, supposedly, threatening the knowledge workers because they can collect and process more information, memorize way more than we can, and enable us to do things that were previously impossible.

And that is true, but they are still not intelligent. They can emulate intelligence through (evolutionary) programming, they can make predictions (using advanced mathematical based algorithm) that hit the mark much more often than the average analyst, and they can find connections we miss. But at the same time they can emulate grave stupidity when they decide to direct you to the camping supply store when a Brit asks for a torch, make false predictions when they just compute the trend without taking into account supply and demand, or connect carpentry to stock trading because both deal with floors. All algorithms have breaking points, especially near untested boundaries. But you don’t know where they are or when they’ll be hit.

The reality is that even though some knowledge workers are being displaced, the need for knowledge workers to create, maintain, and improve these algorithms … and find new areas in which they can push capability forward. Every time an algorithm or machine displaces someone out of an existing job, a new job is created, even if it’s not that apparent. True, a good software solution can replace 10 to 100 workers doing brute force tactical or grunt work with one or two drivers, but someone has to build the software, sell the software, maintain the software, and start a new initiative to build the next generation. Plus, when a company isn’t focussed on non-value add activities, they can dedicate teams to identifying and chasing value-add activities — who might even create new lines of business, and new jobs, in the process.

So yes, the procurement dynamo is right, the future will be man and machine, in a delicate dance, and the focus will be on cognitive activities, but mainly on the human side … finding ways to properly apply, and verify, new technology. Weeding out the false positives with intelligence, identifying the false negatives with insight, and finding new applications the machines themselves will not.

Thus, the true form of cognitive procurement is smarter Procurement Professionals with more TQ than they have today.

The Key to e-Sourcing Success (Free Webinar)

e-Sourcing has been touted as the key to Sourcing and Procurement success and savings for almost two decades, with many providers promising double digit ROIs from their platform. While it is possible for any organization to reach this level of savings with a good e-Sourcing process and platform, the reality is that only a fraction do. But why? Especially when this should be a mature technology, when over a dozen players seem to have all of the same foundation technology, and when the process is well known?

The answer: the platforms are bought, but not used. A little overlooked statistic is that even though close to half of modern Sourcing and Procurement organizations have some form of a modern platform, the average utilization of the platform is typically 25%. In other words, only 1 in 4 people are using it or only 1 in 4 events are being put through it. If the promised ROI depends on 90% utilization but the utilization is less than a third of that, of course the ROI will never materialize.

So why aren’t platforms adopted? It’s proven that they can deliver the savings, so they are effective. Their online nature means that you don’t need fax and e-mail, so there is some efficiency. So what’s the problem? Just because a platform checks the functional boxes, it doesn’t mean it meets the organizational need. And if a platform doesn’t meet the need, it will be avoided, not adopted.

The key to e-Sourcing success is platform adoption, which means that the most important characteristic in platform selection is adoptability — which is often the least evaluated characteristic when organizations are comparing feature function check lists, estimated ROI, value-add, etc. And the key to adoption is adoptability. What makes a platform adoptable? That’s what this webinar will focus on … because the reality is that even a mediocre platform that is adopted 100% will deliver a 3X return over a best of breed platform that is adopted 25%. So imagine the return your organization could see if it replaced its unused e-Sourcing with an adoptable best of breed platform. Curious? Join us next Tuesday, February 7, 2016 @ 10:30 Pacific, 12:30 Central, 13:30 Eastern, 18:30 GMT for our webinar on The Key to e-Sourcing Success.

Simeno – Global Catalogs for Global Businesses

Simeno, which is not yet a household Procurement name in North America, is a provider of a SaaS-based e-Procurement that has been around since 2000 and that has been offering catalog management solutions and services since 2002. Headquartered in Basel, Switzerland, Simeno has grown to be a rather large provider of such solutions in the EU and around the world. With 250,000 users in 60 countries, including users from dozens of Global 3000 companies, Simeno is still growing steadily, having recently opened offices in Germany (Hannover) and the USA (Chicago).

In addition to offering catalog management, Simeno also offers supplier-onboarding, catalog maintenance, and the custom requisition form creation services for their clients so all of their client spend — product and service — can flow through the system. But they are heavily focussed on selling long-term Procurement solutions centered around their catalog-based Procurement solution that can be integrated with the ERP, AP, and other relevant Supply Management solutions that can support the relevant parts of the Source-to-Pay cycle.

The core of the SIMENO solution is the catalog management capability which, like other leading platforms, allows clients to integrate punch-out catalogs, their-own catalogs, and vendor-provided catalogs (in various file formats) and search across all catalogs in real time. Simeno not only focusses on integration, but on fast upload and even faster search. Simeno can process extremely large updates (in the GB) in minutes, search catalogs of up to 10M items in 1.5 seconds and provide a real-time glimpse into what’s happening from a buying perspective in their global organization in just a few seconds.

This catalog solution is offered as a private cloud solution, where access to public catalogs and punch-outs can be as broad, or restrictive, as the organization wants it to be. The platform can be used in conjunction with, or as a replacement for, other catalog and purchasing systems, and can integrate with, or replace Oracle iProcure and SAP SRM UI5. Simeno regularly integrates with a host of ERP solutions and best-of-breed Sourcing / AP systems and can set up workflows to take data in and push data out as needed, which is all part of the initial set-up.

The catalog also supports 22 languages simultaneously, including accents and special characters, product and supplier centric views, and very easy requisition and purchase order creation. The form-based “guided-buying” solution works so well that some organizations have over 1,000 predefined forms, and define more as needed using the detailed form builder that can be used to create forms customized to the organization’s needs.

Simeno is very powerful, and there is a full solution around the platform with RFX, contract management, requisition, purchase order, and invoice management. For more information on these extended capabilities, and deeper insight into Simeno, check out the recent >Spend Matters Pro series (Part I, membership required) by the doctor and the prophet. The deep coverage is worth the time it takes to review it.

KPMG Is Listening To Too Much Bob Dylan …

… but still failing to understand the subtlety of the message the Nobel Laureate conveyed in the message he imparted to us 53 years ago.

Recently, as pointed out by the procurement dynamo over on Procurement World in his post on 4 Fascinating Futures, KPMG gave us four potential visions of Procurement’s future in their recent Future-Proof Procurement paper (co-published with Florida State University’s College of Business). [It’s a great read, by the way, for those of you that always enjoy a good alternative universe/timeline SciFi story.)

According to KPMG, we are headed to one of four possible Procurement futures, namely:

  • Primacy of Procurement
    where Procurement becomes the center of power as a result of technology enablement
  • The Creative Agency
    where Procurement totally re-invents itself in order to stay relevant
  • World of Project Economy
    where Procurement disperses (and becomes merely a means to an end)
  • R.I.P. Procurement
    where Procurement brings about its own demise (and is replaced by machines)

All Depending upon the outcomes of the following matches:

  • human centricity vs. algorithms
  • centralism vs. decentralism

In the second case, it depends upon whether or not the march to centralization continues or decentralism retakes center stage. And in the first case, it depends upon whether technology becomes good enough where it can be trusted in place of a Procurement pro.

And, according to KPMG, the futures are defined by the winners as per the following graphic:

In other words, KPMG believes that we need to either prepare for

  • The Path of Dominance
    where Procurement takes total control of the extended supply chain, and, as a result, the business world
  • The Path of Salvation
    where Procurement totally reinvents itself and stays relevant in the turbulent global economy as time shifts the sands
  • The Path of Harmony
    where Procurement adapts to the gig based project economy and simply becomes a means to an end OR
  • The Path of Progress
    where we enter a new era where there is no Procurement. R.I.P. Procurement (Peter Smith, Spend Matters). (It’s already among the walking dead and soon to be entombed, anyway.)

But all this assumes that there will be one winner in the human centricity vs. algorithm war and one winner in the centralism vs. decentralism, but until SkyNet takes over and locks us in The Matrix, there will be no winner in the humans vs. algorithm war, just like there will always be no winner in the centralism vs. decentralism war as there will always be new recruits to factions on both sides.

We’re not in the world of Anachrony where there can be only one one winner if the cataclysmic future is to be prevented. We’re in the real world, and the situation is a lot more complex.

Bob Dylan said it best:

The line it is drawn
The curse it is cast
The slowest now
Will later be fast
As the present now
Will later be past
The order is rapidly fading
And the first one now will later be last
Cause the times they are a-changing

The line is drawn and the curse it is cast. The two sides of the centralist debate will fight to the last.

The slowest now will later be fast. As the laggards adapt new technology and the leaders drown in that they amassed.

As the present now will later be past. And leaders will fly different masts.

The order is rapidly fading.

And the first one now will later be last. Emerging economies take lead and leading economies are surpassed.

Cause the times they are a-changing.

But the more things change, the more they stay the same. And that’s the underlying message. The conflicts won’t be resolved, fueled by emerging and changing economies, with new governments and organizations taking center stage, discovering and rediscovering the Procurement revolutions, while leading economies go through devolutions as a result of shifting market landscapes and first generation solutions failing to deliver.

Procurement will still be on the verge of death, or among the walking dead, 20 years from now. Only the technology (vendors), processes, and terminology will have changed. The only question is, will your organization have switched sides (from laggard to leader or vice versa).

Despite Bob’s plea, fifty three years later:

Senators and Congressmen still block the hall
They stand in the doorway, don’t heed the call
and the country gets hurt for they have all stalled
and the battle outside keeps raging
it shakes all our windows and rattles our walls
for the times they are a-changing.

On the Ninth day of X-Mas (2016)


On the ninth day of X-Mas
my blogger gave to me:
Direct Sourcing Posts
Risk Management Posts
Sustainable Posts
e-Procurement Posts
some SRM Posts
some CLM Posts
some Best Practice Posts
some Trend Bashing Posts
and some ranting on stupidity …

While it should just be sourcing, as direct sourcing for one organization is indirect sourcing for another, the reality is, it’s not. Most sourcing platforms were designed for indirect sourcing only and can’t handle the complexity that often goes hand in hand with direct sourcing.

If you’re not convinced, take the Direct Procurement Challenge. Chances are your platform will fall flat on its user interface.

Remember, as Aberdeen pointed out in one of their better pieces, back in the time when they had strong supply analyst talent, we’re Living in a Materials World and you better be prepared to do something about it.

That is because Procurement is Complex [and] Your Platform [better be] Capable of Handling It!

The reality is that, for the average organization, Your Procurement Platform is Cost Centric Perfect for Indirect Only. And that’s just not enough.

If you don’t get it, then you need to get a grip on The Nature of Supply Dynamics
Part I: Unknown when Unmanaged
Part II: Commodity Based Cost Models Alone Aren’t Enough.

You need more, much more.

You need a direct procurement platform capable of Sourcing Lifecycle Management: [it is] The Direct Sourcing Cure.

Come back tomorrow for the tenth day of X-Mas.