Category Archives: RFX

iValua: Proving Their Mettle with Source to Settle, Part II

Yesterday, in Part I, we noted that when we last covered iValua in 2010, they were one of the few providers tackling end-to-end sourcing and procurement in a single suite of integrated modules built on one common platform. We noted in Tackling End-to-End Sourcing and Procurement, Part I that this French company had capabilities that, at least to some degree, addressed each of the core phases of the basic sourcing-and-procurement cycle except decision optimization and tax reclamation. Since then, they have added advanced tax tracking capability, and a boatload of other features that include SIM/SPM, Risk Management, Project Management, Enhanced Analytics, and Extensive UI customization. Today, we will continue our coverage of the platform, which includes a module for Supplier Management, that we covered in Part I; Sourcing, Contract Management, and Catalog Management, that we’ll cover today; and Procurement, Invoice Management, Expense Management, Reporting, and Administration that will be covered in the remainder of the series.

Sourcing

Sourcing consists of sourcing project creation, schedule and workflow creation, RFX, and e-Auctions. As noted above, there is no decision optimization, but that is literally all that is missing in their sourcing module.

Project creation in iValua is very powerful as you can not only define the project, but set up the end-to-end workflow, define a schedule, assign team members, and track every step. A project has an identity which captures basic project information, associated documents, a sequence of tasks or actions that will fulfill the project, an assigned team, a schedule, and a forum where team members can collaborate and discuss issues. The tasks and actions supported are quite extensive – and include all of the standard source-to-settle steps such as requirements gathering, supplier selection, RFX preparation, response tracking, proposal evaluation, response analysis, award, and contract. From each task, the users can jump off to the appropriate module in the iValua suite to complete the task. The workflow engine is quite fine-grained.

Contract Management

Contract Management is the creation and management of contract templates, contracts, and signature transactions for e-signing. The gem here is iValua’s online drag-and-drop contract creation capability (with complete audit trail functionality) that works in the browser and fully integrates with Microsoft Word. The view, which has the section index on the left, the section texts on the right (each in their own editable box), and Word-compatible editing options on the top, makes it really easy to construct a contract. The tabs allow for quick access of the header, the team involved in the process, deadline (and auto-renewal) dates, exhibits, main clauses, items and services, negotiated terms, the associated contract scorecard, and the current status of the contract with respect to the defined lifecycle.

Catalog Management

Catalog Management is the process of importing catalogs, creating and managing catalog items, and managing services procurement. Catalog management works as you would expect, and the hidden gem in here is the extensive services procurement management capability, including timesheet capability. The services procurement module allowed for the creation of services profiles (like templates for services requisitions), price structures, and requisitions — which could be fee-based or timesheet-based. The platform has extensive support for services requisitions, and the unique requirements for services requisitions, that require proposed delivery details, schedules, proposed team members, rates, payment schedules, and insurance requirements. It’s not quite as extensive as the capabilities in the Contingent Workforce Management platforms (like FieldGlass) or Agency Lifecycle Management platforms (like DecideWare), but is more than sufficient for the majority of services-based sourcing projects that a typical Supply Management organization will need to address. It is definitely the 80% solution.

We’ll cover the remaining parts of the platform in the remainder of this series. Come back tomorrow!

It’s 24/7 for Robbie and the Coupa Factory, Part III

In Part I we announced that Coupa has been coding up a storm since we last checked in on them last summer (in Robbie and the Coupa Factory), completing Release 9 with major enhancements in expense management, invoice management, and catalog management; the android app; and the first version of their new sourcing module as well as some major improvements to their cart that will show up in release 10 later this quarter. In Part II, we discussed the major improvements in Release 9 around expense management, invoicing, and catalog management. Today we will discuss the new e-Sourcing module and how it makes Coupa one of the first providers to offer an integrated end-to-end e-Sourcing and e-Procurement solution.

The new Sourcing Module is e-Sourcing 1.0. RFPs, RFQs, RFIs, basic reverse e-Auctions, and basic e-Sourcing project management form the foundations of the new suite, which, to be honest, is not much more than you’d find in any e-Sourcing suite on the market, including the free WhyAbe solution available from SourceOne, but that’s not the point. The point is that the inclusion of this module in the Coupa platform makes Coupa, as far as SI can tell, the first Supply Management provider based in North America with an integrated end-to-end Sourcing and Procurement platform. SI has been saying for years that It’s Sourcing AND Procurement and that the only way to truly revolutionize Supply Management is to have one integrated end-to-end platform, and with Coupa’s current offering, with the exception of Decision Optimization (which is only critical for high(er)-dollar (complex) spend in an average organization just starting their e-Sourcing journey), the platform has the foundations of the remaining four stages of e-Sourcing and nine stages of e-Procurement. Some applications, like Spend Analysis, Contract Management, and Tax Reclamation have a ways to go (as tax codes outside North America can get quite complex), but the point is that there is a foundation that allows the entire process to be e-Managed. End-to-end projects can be created that follow the process from cradle (the initial RFI) to grave (when the final order is shipped, received, invoiced, reconciled, paid, and added to the Spend Under Management database for analysis).

Moreover, the entire process can be made available to every user of the platform. While complex sourcing events need to be driven by senior buyers, there is no reason that simple events for simple commodities or services needed by only one department can’t be driven by a senior person in that department, under the supervision of the appropriate Manager or Director. Why should Supply Management oversee every single sourcing event for temporary labour for a system implementation? If there are approved suppliers, approved budgets, and known requirements, there is no reason that a domain expert can’t drive the project with the help of Supply Management, if required. And if the spend for these one-time projects exceeds a threshold, which will be easily detected if budgets are exceeded or reports show significant spend in a given category, then the category can be the next Supply Management sourcing opportunity.

The sourcing module is as easy to use as the rest of the platform, and sourcing events can be created just as quickly as requisitions can be created. RFXs can have as little or as much content as is required; one or more questionnaires can be attached to get information about finances, supplier capabilities, insurance, Corporate Social Responsibility, etc.; an e-Auction can be triggered from an RFX (and initial bids imported); an award can be pushed into the contract management system and the catalog populated; requisitions can be created against the budget associated with the contract and the catalog items; purchase orders can be created on requisition approval; good receipts can be accepted and tracked against requisitions; invoices can be automatically correlated with the purchase orders; and payment approvals can be automatically submitted to your e-Payment system. It’s end-to-end automation of the tactical process, freeing you up for the strategic work.

It’s a great step in the right direction. While Coupa‘s e-Sourcing suite is still at least two versions behind what is being offered by the large e-Sourcing suppliers, it’s the perfect solution for a mid-size organization that doesn’t have a sourcing solution or a current Coupa customer that doesn’t have a widely used sourcing platform due to cost or personnel restrictions. It’s a step in the right direction, and one that is sure to keep the big sourcing providers on their toes, as the big sourcing providers will have to keep innovating to keep two steps ahead of this fast-moving SaaS company.

Why does everyone look to disqualify when they should be looking to qualify?


Rant on blogger, rant on along
Rant on buddy till the day is through
Rant on brother, sister too
Rant on momma like I asked you to do
And rant on fellow blogger, rant on (Rant On!)
 Disqualified!

Today’s guest post is from William R. Dorn Jr (Bill Dorn), the Vice President of Operations at Source One Management Services, LLC.

In the last year, I’ve been pretty active talking about one of my favourite topics, “What Not To Do” when conducting a strategic sourcing event. I’ve blogged about it on multiple sites, spoken about it on several guest podcasts, have a chapter in our book about it, and Joe Payne and I even lightly discussed the topic on a morning television news show in Arizona (which I doubt more than five people tuned in for). So when the good doctor told me he was inviting guest rants this month, I knew what I was going to scribble about. But then, I started to think about it a bit more. I think I’ve said enough on the topic, and I think there is an even more basic premise that deserves attention. That premise is: Why do people in business look to disqualify something when then should be looking to qualify it?

I’m sure we’ve all heard the following lines come out of our colleague’s mouths before: “We did that before it didn’t work“, “It’s always worked until now; why would we change it“, “Our staff doesn’t adapt well to change“, “Let’s just push this through for now and look at the alternatives another time“, “it wouldn’t work here“, “we’re not ready for that“, “it’s not really practical here“, “we don’t have the time“, “it costs too much“, “it’s not in this year’s budget“, “we’re too busy“, or the one I hate most “our company (or our requirements) is different“.

As consultants, there really is not a day that goes by that we don’t here at least one of these classic lines from one of our clients. As procurement or supply chain professionals, you probably have all heard one of those dreaded deal breakers right when you thought you had a really creative solution, technology, or vendor that could have helped your business.

But, did you realize that a large portion of you are doing exactly the same thing during your sourcing process? You probably aren’t aware you are doing it, as it’s not as direct as the examples above. And in many cases, it’s really not your fault; you’re just following a procedure, policy or e-sourcing software template that was written in stone before your time. What I’m talking about is a sourcing process that looks to disqualify instead of qualify.

Let’s really look at your sourcing process, whether it’s the Supplier Discovery, RFI/RFQ/RFX/Reverse Auction, or whatever you call it. Does it have questions that really serve any purpose other than to disqualify? Why are those questions included? Chances are, they are simply there to help take a long list of potential suppliers down to a really short list, in order to make the review, selection and award process easier and quicker. Well, we all know that easier and quicker is not always better, but this often gets ignored when it comes to doing work. Here are just some examples of what I’m referring to:

  • Is your company ISO certified? Questions like these (the hard YES/NO), especially used in conjunction with automated rating and scorecarding tools in e-sourcing systems are a huge pet peeve of mine. First off, is the ISO certification even relevant to what’s being sourced? In most cases, it’s not. Secondly, it leaves no margin for answer. What if you are going through the process but will not be certified until next month? What if you are not ISO certified, but are certified by a similar industry specific association, like QS? “Well, we didn’t ask that. You’re disqualified.”
  • We recently responded to a large RFP that had a short deadline. One of the requirements of the RFP was that the response was received electronically and in hard copy, no later than 2:00 PM on a certain date. The company we responded to acknowledged receipt of the submission, but FedEx was actually late in delivery of the hard copy, 2:37 PM to be precise. The prospect promptly rejected the delivery and entirely disqualified us from the bid, even though they already held the electronic copy. They never even opened the bid. We’re not the only ones either; I talked to others who responded that had the same thing happen, all because of a storm that delayed FedEx by a few minutes. In this case, a ridiculous policy had a company throwing away potentially the best possible suppliers without even reviewing their submissions. In other words, “Oh, you’re human and a small mistake happened? You’re disqualified.”
  • We frequently see RFPs that have a “deadline” for submitting questions. Many of those companies refuse to answer any new question you may have after that deadline date. What does that lead to? Well, it forces suppliers to guess at what they THINK you may need, often missing the mark and often submitting a proposal that doesn’t really address the buyer’s needs appropriately. It’s not that they couldn’t support your need; they just simply misinterpreted your requirements and did not have a fair opportunity to present a proper solution. “You couldn’t read our minds, You’re disqualified.”
  • Do you have on office within 25 miles of our location? Well, no, we don’t but the work is being done remotely, so that should not have any impact on our level of service or price … “Too bad, You’re disqualified.”
  • Here’s a 43 page RFP where every answer is a long-form answer and half of the questions don’t apply to this initiative. You have until Friday at 5 to answer it. “That’s not enough time? You’re disqualified.”
  • You must agree upfront that you will use my procure-to-pay punch-out catalog ordering system. Oh, and the software company that runs it gets a piece of every single transaction. But I still want the best possible price. You want more information or are concerned about digging into your margins? “I don’t understand why you could give me a better price if you didn’t have to pay an intermediary too. You’re disqualified.”
  • We’ve got this great opportunity to ask questions for you. We call it a bidder’s conference. You’ll sit around a table with your competitors and must introduce yourself so that everyone knows who they are competing with. “What do you mean you are uncomfortable doing that? That’s what I want. You’re disqualified.” (This is providing that they don’t drop out themselves as most suppliers do after they have to sit through a circus like a bidder’s conference).
  • “Do you have substantial experience supplying the nano-microorganism plating industry? Provide me with 5 references. You sell office supplies? I don’t see how that is relevant to the question. Do you supply other nano-microorganism plating companies or not? No? You’re disqualified.”

I could go on and on with dozens of examples of poorly written questions or poor methodologies that serve absolutely no purpose other than to disqualify, but I’m already over the doctor’s budgeted word count (I hope he doesn’t disqualify my post for it).*

Now, I’m not saying that some questions and some responses shouldn’t be grounds for immediate dismissal, and I understand that you have to find an appropriate balance of how many suppliers you can review for a spend category, but sourcing and procurement folks really should take a hard look at their processes and really look at themselves to see if they are just as guilty as the naysayers throwing around clichéd business brush-offs like the ones I wrote about above. Are you really offering a warm invitation to suppliers to help improve your business, or are you just schlepping through a dreaded process just to tell your bosses that you “went to market”?

Thanks, Bill! You’re really helping me with my point that many RFX processes are not implemented correctly, especially in technology acquisition at large companies!

*To be precise, Bill is over my suggested word count, which I’m happy to ignore as long as the rant is raving and engaging!

Bravo to CPO Agenda for Pointing Out That Charging Suppliers to Bid is a Really Bad Idea!

As I’ve told everyone who has ever asked, charging suppliers to bid is a really bad idea. Not only does it generate ill-will, but as this recent article over on the CPO Agenda that gave “tips for understanding why charging suppliers to tender is a bad idea” noted, it could even be illegal. But let’s take the tips one-by-one because it seems that this practice, which started rearing its ugly head at the start of the recession, is still trying to push through.

  • It is Counter-Productive
    It reduces the expressions of interest from time-wasters and quality suppliers alike. This is what goes through the head of a serious bidder with a quality product: “I know my product is quality, and so do my happy customers, so why should I pay $1,000 just for the opportunity to submit a bid? I’m not even guaranteed my product will be evaluated. I’m going to bid on these four other RFxs instead.” So, what you’ll end up with is a set of suppliers who are desparate for your business. But why are they desperate? Maybe their sales team can’t sell worth a damn, or, maybe (and the doctor leans this way) their products just aren’t as good as their competitors, or if they are, they are not able to produce them as cost effectively. Do you really want inferior products or unnecessary premiums for quality?
  • Suppliers with No-Pay-To-Play Policies are Out
    Not only will you likely knock out most of the quality suppliers in your potential supply base who, while quite willing to bear the costs of providing you with product samples, etc, are not willing to pay just to bid, but you will definitely knock out any supplier with a no-pay-to-play policy that prohibits them from bidding on any contract that requires a bid fee. These could be the best suppliers in the world.
  • There’s no Rationale for it
    The logic is that it takes time to collect, verify, and analyze a bid, and while this is true, with modern e-RFx / e-Auction software, you can collect, verify the completeness of, and compare a bid to a benchmark in less than a second. You will likely only need to analyze the Top 5, accoring to your weighted metric, in detail at the end of the day. And, since you can now buy unlimited use of these systems for less than what a single project used to cost, it doesn’t cost any more to collect fifteen bids than five bids.
  • It is Unethical
    There is way too much opportunity for corruption or the perception of favouritism. (In simple terms, you are sending this message: We value suppliers who bribe us for our business.) Plus, there is always a chance that this restriction could be illegal, in breach of fair competitive practices, or public procurement law. Oops! Can you say “class action lawsuit”?
  • It Says Your Company Is An Ass
    Okay, so the original article said it sends a strong message to the supply base you need to connect with that you are actually uncooperative and uninterested in building a relationship that will benefit both parties, but this sums it up nicely. Unless your organization has a monopoly, and can get away with being a self-centered smug corporate ass, just don’t do it.

Managing Indirect Spend: An In-Depth Review, Part I.1

Late last year, Joe Payne and William (Bill) Dorn of Source One released their first book on Managing Indirect Spend (Amazon) which is a culmination of everything they have learned while doing nothing but Strategic Sourcing since 1992 — before it was cool. Clocking in at 422 pages, this is an incredible resource for anyone who wants to get a handle on indirect spend, which has increased significantly since outsourcing and right-sizing rose to fame in the 1990s.

This book, which should be on the desk of everyone looking to get a handle on indirect spend, is loaded with so much information that there’s no way SI could do it justice in just a post or two — so it’s not going to even try. Just like the book is broken down into four parts, our review, over the next few weeks, will be broken down into four parts — and then into sub-parts where there is just too much to comment in with a single post.

Today we’re going to review the first part of Part One – The Process, and, specifically, the chapters that cover the first three parts of their six part process, namely:

  • Data Collection & Spend Analysis
  • Research
  • The RFx Process

We’re all familiar with the basic process, and if you are a regular reader who has downloaded the free e-book, no registration required, Spend Visibility: An Implementation Guide, then you are very familiar with the data collection and spend analysis process. However, the chapter still makes some good points that need to be reiterated, particularly in regards to building sponsorship and understanding the category. Lack of sponsorship will kill your project faster than a minnow can swim a dipper, and to get it you need the end user’s support as well as senior management. As Joe and Bill state, this will require sitting down with the users and letting them know that they are not being singled out by your spend project, that your project’s success depends on them and is their success as well, and that your project is designed to tie to their objectives (as it should be). In addition, the following is a great checklist of information you will have to review with your users before starting a serious sourcing project on the category:

  • business relationship (with current suppliers)
  • product or service utilization specifics
  • location impact
  • financial implications
  • contractual obligations
  • reports, requirements and actual utilization
  • service requirements and expectations
  • supplier ranking

Joe and Bill also provide some great advice on how to handle the three different types of responses that you will encounter when requesting data from incumbent suppliers — acceptance, avoidance, and pushback — and questions to consider during supplier interviews.

Moving on to the research phase, they provide a breakdown of the eight (8) elements that need to be researched during any sourcing initiative (that you want to be lucky) as well as some great tips for collecting market intelligence through the RFI process. While modern tools, including Source One’s own WhyAbe, make the creation of RFIs drop-dead simple, getting responses and, in particular, the responses you want can be challenging for a variety of reasons. Suppliers might not think you’re serious, might not want to expose what they consider to be sensitive data, or might not be comfortable with the tool. A carefully constructed process has to be put in place, followed, and sometimes augmented by other approaches for the research phase to be truly successful. Joe and Bill lay out their advice, garnered from almost twenty years of experience dedicated to sourcing projects, in detail and offer a blueprint for your success.

Then they jump into the full RFX process, which might consist of an RFP and / or an RFQ/RFB and dive into the typical elements of a good RFP and RFQ as well as the evaluation process that should be followed and the response that should be provided if you want your suppliers to participate in the process again. One point that they make that most other resources miss is the need to include disclosure and liability sections in the RFx document. This is critically important when inviting new, unknown, suppliers to an open event. If these suppliers aren’t awarded the business, they may sue you on the premise that the invitation for bid was in fact an invitation to do business and that the RFx constituted an MOU to be replaced by a future PO or contract once the information was provided. Slimy and shady to say the least, but this has happened. They also discuss the reverse auction process and when it is preferable to an RFX. Finally, they end their discussion of the first half of the sourcing process with a discussion around the need for flexibility and creativity in the sourcing process, a discussion that’s often overlooked. Significant savings are never found by doing the same-old, same-old or just applying one or two sourcing technologies. They are found when the parties come to the table, broaden their horizons, and look for new, creative, and innovative ways to meet organizational needs. And, as Bill and Joe state, suppliers are often much more motivated and engaged when buyers take an alternative approach. So be flexible — and stay tuned. Part I.2 is coming!