Category Archives: SaaS

Platforms are Needed to Accelerate Procurement Agility – But Don’t Overlook the Offline Contributions

Over on Spend Matters UK, the public defender wrote a great post on “Why Platforms are Needed to Accelerate Procurement Agility” and discussed how the digitization of our everyday lives through cloud-based services served up over the internet is arguably the single greatest consumer trend of the modern era. In this post, he noted that the digitization trend has also worked its way upstream into B2B value chains and since businesses don’t want to be “digitally disrupted” by others they are searching for new supplier capabilities they can serve up as new customer-facing services.

This is a great use of digitization capability where it makes sense, but it’s not just online agility that is needed, it’s offline too. And this is where modern platforms can make the most impact.

Consider the NPD/NPI lifecycle. Right now, what typically happens is engineering works in their own little world designing a product, and when it’s mostly done, they contact procurement to help them find sources of supply and qualify their preferred manufacturing houses. This is typically done in CAD/CAM software, disconnected from everything, and can be a slow process.

Initial design might have to be slow, but the fact that its disconnected can really slowdown the NPI cycle. If design is not plugged in to the rest of the enterprise, and Procurement cannot be involved from day one, the engineers might choose discontinued parts, work with unfavourable suppliers, or even work on features that are not desired by the majority of current customers.

Then there is sourcing. Without advanced knowledge, Sourcing will not only need ramp up time to identify sources of supply, but might be stuck trying to source materials in limited supply that have a locked in price higher than the organization can afford if it wants to meet cost targets. Early involvement can help Engineering understand where the cost is and select the right design options when it has a choice.

Then there is inventory and manufacturing planning. Procurement needs to be plugged into marketing and sales to accurately estimate demand, and have to be in tune with supplier production capacities and shipment times to make sure orders are placed on time and stock-outs can be addressed quickly in times of demand surge.

The only way NPD/NPI time can be minimized is if the process goes smoothly. The only way this can happen is if Procurement is involved from the beginning and can connect with each impacted department in the organization at the right time and can communicate with suppliers quickly and consistently. This can only be done with a modern platform and illustrates why platforms are truly needed for Procurement agility.

BlueCart – Bringing Restaurants into the Modern Era!

BlueCart is an online ordering platform for small (and even mid-size) restaurant buyers in the food service industry, the distributors who serve them, and the sales representatives that manage the relationships. BlueCart is different than most offerings in that it is a hybrid freemium CRM/SRM platform designed not to help buyers identify the lowest cost, which doesn’t make much difference if you’re only ordering 10 units of something, but maximize their efficiency, allowing the buyers more time to focus on improving their business, growing their service capability, and, when appropriate negotiating their discounts with preferred distributors with a history of good, timely, service and quality. (In the restaurant industry, especially in the luxury restaurant industry, profits are highly revenue, and not cost savings, driven. The last thing you want to do is be unable to serve a potential customer, so assurity of supply trumps lowest cost, as it does in automotive where a production line halt can cost millions.)

BlueCart has made fairly fast penetration into the market, already signing up close to 8,000 restaurants and distributors, and should expand even faster when it closes its series B funding and ramps up its sales and marketing efforts and penetrates even more distributors. This is primarily due to fact that they are using a B2C freemium model where ordering is always free and secondarily due to the fact that distributors are incented to sell on BlueCart’s behalf since it makes order management and customer account management easier for the distributor than traditional phone-and-fax orders (especially if all of their customers are on the same platform).

The platform has two main components: the buyer platform and the supplier / distributor platform.

The buyer platform currently consists of basic order placement, messaging, supplier management, and simple reporting functionality as well as some new functionality around supplier and inventory management. The core functionality is the order functionality, which allows buyers to add to the cart using catalog search and custom-category drill-downs and per-level based ordering. Categories can be defined by food group (dairy, meat, seafood, etc.) or by inventory location which can make it incredibly easy for chefs and buyers to order what they need when they need it. Per-level ordering automatically computes order quantities based upon current inventory and pre-defined stock levels. Both methods add to a persistent cart that allows orders to be built up throughout the day so that both the buyer and the distributor can be sure the order is complete when it is submitted.

The supplier platform is centered around order, and catalog, management. When a supplier logs in they see their dashboard that allows them to jump into order management, catalog management, order fulfillment management, and analytics. The order management allows the supplier to see all orders, in all states, and filter by state, date, and customer. This allows a supplier to quickly zero in on the orders of relevance at any particular time. Embedded in the analytics / reporting module is the order fulfillment report that allows a distributor to, for each product (group), compile a list of all outstanding orders that need to be prepared (and put on the truck) for the day. This makes it very easy for the distributors to ensure that all orders in on time get accounted for and on the truck. Much easier than trying to compile the list from paper-based phone orders, e-mails, and faxes.

While the power of the platform is still pretty basic compared to mature e-Procurement platforms in the indirect sourcing space, it is (much) more powerful than what an average restaurant or small distributor, trying to manage orders and inventory off of ill-equipped spreadsheets, has ever had at their disposal. And, as such, deserves to be investigated. For more information, as well as a detailed SWOT assessment, watch for the upcoming Spend Matters Pro series (membership required) by the doctor and the prophet coming this week. It’s worth a detailed investigation!

Want an Exceptional Supply Management System? Do NOT Forget the Supplier!

Exceptional results come from the right intersection of exceptional talent, exceptional technology, and exceptional transformation. The three T’s.

And while each piece is important, and no piece can be ignored, the importance of good technology is often overlooked, and, more importantly, key factors that differentiate good technology from great (and exceptional) technology are almost always overlooked — and this is one reason why there are so few true best in class Procurement organizations (and why the Hackett top 8% is the top 8%).

So what makes a great Supply Management System?

Factors include, but are not limited to:

  • ease of use as even a junior buyer should find it natural
  • customizeable workflow as it should fit the transformed organizational processes
  • data import/export as data will need to be imported from ERPs and predecessor systems and exported to successor systems
  • templates and template customization so that RFXs/Auctions/Orders/etc. can easily be created, customized, copied and reused ad infinitum
  • multi-currency support as most Procurement organizations have to deal internationally

And each and every one of these factors should be considered, and included in the evaluation of the supply management system, and systems that do not score well against each and every one of these factors tossed aside, but is this enough to insure you get a great system? Of course not!

First of all, it has to contain all of the specific functions required of the system you are evaluating. For example, if the organization is looking for strategic sourcing, then the organization needs optimization-backed RFX and Auction capability as well as analytics and spend analysis. For Procurement, requisition management, approvals, budget integration, automatic (split) PO creation, good receipt management, invoice acceptance and m-way comparison, etc. And so on. If all functions are there, and all work well, it could be a great system — for the organization.

But will it be an exceptional one? Not necessarily. Exceptional systems need lots of data — and use — to produce exceptional results. Some needs to come from the organization. Some needs to come from third parties. And some needs to come from suppliers. And typically that data is needed in (near) real time. Which means you need suppliers to use the system — which is something they are only going to (want to) do if it’s easier for them to do it in the system, than do it outside the system (and bitterly complain if they are forced to use it to submit invoices to get paid).

This means that the system also needs to be designed for the supplier — something many first, and even second, generation systems were not, even if they had a supplier portal.

Not only should the system be as easy to use for the supplier as it is for the buyer, but it should enable their workflows, provide them with templates, make data import and export as easy for them as it is for the buyer, offer them full multi-currency support as well, and support the internationalization necessary for all of your suppliers in the countries you do business with to use it in their native language.

For example, if you want a supplier to respond to each and every RFX and auction, make it easy for them to manage their catalogs and quickly select the relevant products, update price lists, define volume discounts, and define what you get to see — and don’t get to see. If you want a supplier to use it for e-Invoicing, make it easy for them to upload, create, manage, and track invoice status not just of invoices sent to you, but of all their invoices (as chances are their AR system or sales system doesn’t do that). Make sure they have the same rights to create user accounts, set permissions, and delegate work (especially with respect to RFX responses) to the right people as you do. Let them toggle between languages. And, most importantly, before they submit, let them see what you see the way you see it.

And if the system is truly exceptional, you’ll easily be able to see what they see (with a toggle view) before you send it. Suppliers are your supply chain, so it’s as important to support them as it is to support you — and an exceptionally designed system will do that.

Who Do Catalogs Serve? Not Who They Are Supposed to!

Over on Spend Matters, the prophet and the maverick recently co-authored a post that asked “Do Catalogs Serve Suppliers or Buyers More?”. The answer varied depending upon the (age of the) platform, the implementation, the intent, and the author, but the simple answer — which did not really come through loud and clear in their post(s) — is not who they are supposed to serve. Especially if it’s a first generation catalog.

We’ll take first generation catalogs first.

A first generation catalog is nothing more than an electronic version of a paper catalogue — and when you are in a rush to find and order a product, how good is that? With a paper catalogue, you flip to the index, hope the keywords you can think of are there, and hope the product on the page you flip to will do the job at a decent price. With an e-catalog, you are scanning through a keyword index or searching keywords and hoping the right product at the right price comes up. Not that useful, whether you are the buyer (who may or may not find what you want) or the supplier (who may or may not have their product found and requisitioned), especially when the buyer has to search each catalogue separately and will stop when the find the first acceptable product (which could be in another supplier’s catalog).

A second generation catalog is a bit better as it indexes all text, allows all supplier catalogs to be searched simultaneously, allows side-by-side comparison, single cart, and automatic PO splits across suppliers when a requisition is approved. But it’s still not perfect. The product might not be there. It might be out of stock. The price might not be right — or there may be no capability to communicate with the supplier for clarification on important details. The buyer is not served, and the supplier is not served.

Third generation catalogs are much better, and were supposed to solve the issues as they also allow punch-outs; real-time federated search across internal, supplier, and punch-out catalogs; communication; RFX; preferred and contract items to be weighted or forced to the top of the listing; budget integration; and visual guilt features, to make sure a buyer buys what should be bought when and how it should be bought. This helps Procurement help buyers buy on-contract items on-contract and steer purchases to preferred suppliers. And it helps suppliers because they know if they have a contract or are preferred, buyers will be guided to them.

But it doesn’t serve either party if the need isn’t served by an on-contract item in stock at a preferred supplier, because the buy might not be appropriate for catalogs in the first place. If the buyer buys an overpriced item via punch-out, that doesn’t help Procurement. And if the buyer buys the wrong product from the supplier when there was a better one, the supplier gets a bad rap and may not be bought from again.

The problem is catalogs, like GPOs, are presented as the be-all, end-all tail-spend management solution when, in reality, tail spend (as pointed out in Sourcing Innovation’s recent paper on An Introduction to Tail Spend — and why you need a technology-based solution, tail-spend is a very complex beast that is often only suitably served by a mix of catalog, RFX, and auction buys, often optimization-backed, with the solution varying with market conditions and particularities of the need.

And a catalog will never tell you when it is the right — or wrong solution. So unless it’s only a part of a full tail-spend suite, with expert guidance (via expert programmed workflows), it won’t even come close to serving either party. Remember that before buying a “new and improved” e-Catalog solution.

DirectWorks: SaaSifying Co-exprise

Co-exprise was founded back in 2004 with a goal of building a new-type of direct sourcing solution not yet available in the North American marketplace. The goal was to integrate the new sourcing tools of the day — namely RFx, auctions, project management, collaboration, product information management [PIM], dashboards — with bill of materials, supplier engagement and management, and workflow management — capabilities not found in standard sourcing tools but desperately needed by manufacturers to handle their direct sourcing needs. In fact, it was so revolutionary that the doctor described it in 2007 as the first solution on the [North American] market to make a serious, honest, effort to address the complex direct sourcing problems that other systems cannot handle because these types of problems are unique and require a distinct solution.

The Co-exprise platform was relatively unique in its day in that it was built on a number of basic building blocks, including workflow management, business process rules, collaboration technologies, a centralized repository, project management, cBOMs (collaborative Bills of Material), cost models, and analytics, that were inherent to, and invasive across, the platform. This meant that all of the technologies were integrated into one collaborative workflow where all of the common data required by a direct sourcing professional was always accessible and analyzable. But, fast forward a few years, the platform had one failing — and that was that it wasn’t designed to be multi-tenant SaaS from the ground up.

Why? Back in the early 2000s, fast internet wasn’t pervasive, third party data center and application management was expensive and, most important, manufacturers wanted to keep their proprietary data in-house and valued deep security over remote manageability. But now that cost is paramount (and SaaS is always cheaper than in-house for non-IT enterprises), the cloud is accepted, and multi-tenant SaaS managed by professionals is often more secure than the corporate intranet, the playing field has changed and modern manufacturers want a SaaS platform.

So, shortly after a regime change, Co-express decided that it needed to go true multi-tenant SaaS, and that it would re-build from the ground up … as DirectWorks. Doing this would allow them to take advantage of new web development capabilities, such as better UI and distributed processing, that might not be doable if they just tried to do a straight port. So was this the right thing to do?

Yes and No. The new platform has a very easy to use and clean UI. Is extremely simple for the mid-size manufacturers that still use a traditional BoM sourcing approach that it was designed for. It allows manufacturers to organize items into products and products into programs so that sourcing and management can be done at the appropriate level. It still has good RFQ capabilities and a supplier repository. And a graphical dashboard with reporting capability.

But it still doesn’t have many of the features in the original Co-exprise product. There are no auctions. They may not be common, but sometimes it’s the fastest way to source commodity raw materials and items at market prices. Co-exprise had a fair amount of configurability and a workflow manager with some capabilities to customize the application to the buying organization, and the new SaaS product doesn’t really have either yet. The BoM structure and sourcing process is very inflexible, and there are no hints of true SRM.

However, while the indirect sourcing platform space is quite large, the direct sourcing space is quite small. The only players are DirectWorks, Pool4Tool, and SupplyOn — the last of which is mainly oriented around electronic interfaces and document exchange (but which also includes proposal, auction, and contract management capability). And while Pool4Tool, which used to lag in usability and integration among its modules, has now caught up and surpassed DirectWorks, Directworks has managed to port over half of the capabilities they built over ten years in two years, so it’s conceivable in two more they could be back to their glory days and a major fighting force on the market. Time will tell. And SI will be watching.

For a much deeper dive into the new DirectWorks, watch out for the upcoming Pro series by the doctor, the prophet, and the maverick over on Spend Matters Pro!