Category Archives: Sourcing Innovation

Advanced Sourcing Yesterday — No Gen-AI Needed!

Back in late 2018 and early 2019, before the GENizah Artificial Idiocy craze began, the doctor did a sequence of AI Series (totalling 22 articles) on Spend Matters on AI in X Today, Tomorrow, and The Day After Tomorrow for Procurement, Sourcing, Sourcing Optimization, Supplier Discovery, and Supplier Management. All of which was implemented, about to be implemented, capable of being implemented, and most definitely not doable with, Gen-AI.

To make it abundantly clear that you don’t need Gen-AI for any advanced enterprise back-office (fin)tech application, and that, in fact, you should never even consider it for advanced tech in these categories (because it cannot reason, cannot guarantee consistency, and confidence on the quality of its outputs can’t even be measured), we’re going to talk about all the advanced features enabled by Assisted and Augmented Intelligence (as we don’t really have true appercipient [cognitive] intelligence or autonomous intelligence, and we’d need at least autonomous intelligence to really call a system artificially intelligent — the doctor described the levels in a 2020 Spend Matters article on how Artificial intelligence levels show AI is not created equal. Do you know what the vendor is selling?) that have been available for years (if you looked for, and found, the right best-of-breed systems [many of which are the hidden gems in the Mega Map]). And we’re going to continue with Sourcing. (Find our series on Advanced Procurement — No Gen-AI Needed! Yesterday, Today, and Tomorrow at the following links.)

Unlike prior series, we’re going to mention some of the traditional, sound, ML/AI technologies that are, or can, be used to implement the advanced capabilities that are currently found, or will soon be found, in Source-to-Pay technologies that are truly AI-enhanced. (Which, FYI, might not match one-to-one with what the doctor chronicled five years ago because, like time, tech marches on.)

Today we start with AI-Enhanced Sourcing that was available yesterday (and, in fact, for at least the past 5 years if you go back and read the doctor‘s original series, which will provide a lot more detail on each capability we’re discussing. (This article sort of corresponds with AI in Sourcing Today that was published in January, 2019 on Spend Matters.)

YESTERDAY

Workflow / Project Automation

Once a sourcing project is defined, which typically consists of identifying the required products and demand, the critical requirements of the supplier pool, the RFI, the RFP/Q, the evaluation criteria and weightings, the award rules, and the initial award offers, the entire project is easily automated using rules-based automation. Best-of-breed platforms will integrate fuzzy matching to identify additional suppliers who provide similar SKUs, RFI/P/Q templates which will automatically be pulled in and modified based upon the particular items in the category and organizational risk/compliance rules using semantic characteristic matching (traditional NLP will be fine), and built in “cherry-pick” algorithms that will compute standard award scenarios (lowest price, max 3 suppliers, geo-split, etc.) and create a default recommendation — which only requires math and traditional analytics.

Auto-Fill

For the better part of the past decade, the best platform auto-fills not just successive rounds, but auto-fills / pre-populates all of the supplier, item, and RFI data based on available information in all integrated systems — be it from past events, the supplier master, the forecasting platform, or market(place) data (for products).

This just requires rules-based automation and workflow with reg-ex pattern matching, and simple trend analysis and market data matching for price / demand population. Easy peasy on the tech ladder.

Outlier Identification

As we wrote years ago, it only takes one bad data element to make a good sourcing process go bad. Just one. One bid too low that takes a buyer down the wrong path. One risk rating too high that steers a buyer away from what would be their best supplier. One demand error that steers the best supplier away. But all of these “outliers” can be easily detected with traditional mathematical clustering algorithms used as the back-bone of machine learning — k-means, nearest neighbour, etc. — and identifying any values too far off the norm and then alerting the buyer to (have the supplier) correct them.

Rule-Based Auto-Award Identification

For simple scenarios where it’s always lowest cost, simple mathematical calculations can identify the supplier-item awards, and these can be limited to a max # of suppliers as then it’s just computing some combinations. No “AI” required.

SUMMARY

Now, we realize this was very brief, but again, that’s because this is not new tech, that was available long before Gen-AI, which should be native in the majority (if not the entirety) to any true best-of-breed Sourcing platform, that is easy to understand — and that was described in detail in the doctor‘s 2019 article for those who wish to dive deeper. The whole point was to explain how traditional ML methods enable all of this, with ease, it just takes human intelligence (HI!) to define and code it.

The More Things Change …

… the more they stay the same … and the more relevant the past, and the education of, becomes.

Ten years ago today, the doctor asked are you doing it wrong?

Ten years later, the question is just as valid now as it was then. Because if you were doing it right, your supply chains wouldn’t be in such disarray.

Ten years ago we noted that, if you’ve been following the media, you know that we have reached a point were most major business publications are now putting focus on Supply Chain as your top risk and your top opportunity and that they have been preaching the following solutions to not only tame the risk but increase the opportunity.

1. Comprehensive Category Management

Nothing has changed here. One consulting firm is literally sending the same email newsletters they were sending a decade ago on the topic because it’s still relevant, and most firms are still doing it wrong.

As the doctor noted a decade ago, spot buying individual categories at market lows or evening running reverse auctions at opportune times is not category management, not in the least — nor is running your buys through a “magic” or “delightful” intake-to-procure platform (better called “faketake” as a colleague of mine will point out). As was said before, Category Management isn’t just about grouping all seemingly related items and running an event, it’s grouping items that have related characteristics that allow the items to be sourced effectively under the same strategy — which could even be early renegotiation with an incumbent who might give you a great deal to keep you from going back to market. It’s taking a holistic strategic approach, not just mapping to UNSPSC or some out-of-the-box 2-level taxonomy and running with it. And not doing it is what’s resulting in stock-outs and cost-overruns. Because now, it’s not just price, it’s quality and supply assurance. Especially supply assurance. Which brings us to …

2. Supply Chain Risk Monitoring

Not much has changed here, even though the technology now exists for it to change at the majority of multi-national companies. A decade ago, we noted that natural and man-made disasters devastate supply chains when they result in raw material or product unavailability for weeks or months. When a company doesn’t understand their dependence on a single source or the risks that single source is subject too, they can figuratively get caught with their pants down to say the least. Still holds true today.

A month ago we also noted that most leading companies in the Risk Management arena are now tracking and monitoring their tier 1 supply base for not only missed deliveries, but late shipment dates and inquiring immediately when something is late shipping. However, by the time a shipment is late, it’s often too late to go to another source if the reason for the lateness is the lack of an important raw material. Multi-tier monitoring is key, but most Procurement departments are only now exploring supplier risk management in their supplier management module / application, which is tier 1 — even though we now have a number of great solutions that can monitor to at least tier 3, if not down to the source of each raw material in your supply chain. Considering that any good supplier information management solution will allow you to push in risk, compliance, performance, and visibility data, there’s no reason not to be monitoring your critical supply chains. Especially now that we can easily handle:

3. Big Data

What used to be the biggest buzzword-du-jour (before all this useless Gen-AI, desired only by Dr. Evil himself), Big Data is still desirable, but only to the extent you actually have valid, verified, data. Considering that the algorithms that actually work predict demand, acquisition cost, projected sales, etc. based on trends — unverified non-demand, cost, price data (for the wrong product) is NOT going to be of any help.

Get a real data analysis tool, validate the data at your disposal, and use it to your advantage, no more, no less.

the doctor dislikes logo maps! So why did he create one?

To demonstrate how, to date, they have all been completely useless, with some to the point of being actually harmful, but now that the gauntlet has been cast, he expects the next version of at least one of these maps to only be mostly useless (and maybe even only moderately useless) and mostly harmless. It’s the same reason he developed the initial versions of Solution Map*, because he found all of the big analyst firm maps mostly useless, and completely useless for tech selection.

(On the tech map front, how can you compare the technical capabilities of a solution where the axis are each on subjective classifications such as “strength and “strategy” or “execution” and “vision”, and, furthermore, where each of these nebulous concepts is made up of half a dozen subjective ratings meshed into one. While not perfect, at least Solution Map gave you an apples-to-apples pure objective technology rating (as each question had a defined rating scale based on technical maturity) against an unbiased pure customer opinion. So you at least knew whether or not

  1. the vendor actually offers a readily available solution of that type
  2. how it compares to the market average of vendors with actual available solutions of that type)

Thus, if you insisted on using logo maps, he at least wanted to make sure there was at least some redeeming qualities.  However, as he has already stated, his map is mostly useless and while a few flaws were corrected on release, some are inherently not addressable.  The problem with these maps in general is that, in addition to all the weaknesses the doctor addressed in his release post, namely:

  • Some vendors/solutions no longer existed as of release date (which was addressed)
  • Many of the categories are meaningless and not actual solution modules (which he corrected, but this means the fit varies across vendors in a category)
  • Vendor logos were not clickable, and not even footnoted when all you got was some strange symbol that looks like it should be carved on a 3000 year old ruin (which is the primary improvement, all logos are clickable and take you to the vendor site as of the release date).

4. They are nowhere near complete.
Most of these maps are in the 100 to 150 logo range. As the doctor has clearly demonstrated that’s only 1/7 to 1/10 of the number of vendors in the core space. Furthermore, even though the doctor does a full database update at least annually, he will guarantee that not even his map is close to complete. While he’d wager he has 90% of the vendors actively selling in North America and Western Europe in the core Source-to-Pay buckets, that percentage goes down as you venture out into the periphery. Plus, in some areas, like ESG/Carbon, he tracks only those focussed on carbon/scope 3 accounting with supplier management / sourcing integration capability, and ignores the remaining ESG/Sustainability/Climate vendors, of which there is likely 10 times as many right now (although we’ll see a lot get swallowed up or die off as the space matures). Most of the supply chain risk vendors are missing unless they offer core supplier management capabilities, or integrate with supplier management modules, as well. And so on.

5. The landscape changes daily.
the doctor did a full database review last year when he did his 39 steps … err … 39 clues … err … 39 part Source-to-Pay+ series, and since then, over half a dozen vendors/offerings are completely gone and over a dozen acquired and swallowed into larger vendors. One, acquired in 2022 that was still offered as a standalone solution late March disappeared by the final link checks that began on April 13. So, while these maps are distributed by their creators for months, and sometimes a year, they are only valid as of the last date where the creator actually re-verified every single vendor.

6. The vendors are only comparable at the baseline, IF they are comparable at all.
If no two (2) vendors are created equal, imagine how different twenty (20) are, or one hundred (100)! If you refer back to our previously referenced 39 part Source-to-Pay+ series,

  • sourcing vendors break down into RFX, Auction, optimization and may/not contain (best-practice) templates or category expertise
  • contract management generally breaks down into negotiation support, (post-signing) lifecycle (execution) management and tracking, and analytics
  • spend analysis is similar, but differs on DIY vs. services led, load/classification support vs. self load/(re)class, out of the box report templates, autonomous analysis and opportunity identification, etc.
  • supplier management was broken down into the 10-segment CORNED QUIP mash, which expressly excluded DEI, because most application thereof is definitely NOT equitable (as the biggest promoters clearly never looked up what the words actually mean in a dictionary)
  • eProcurement, while it revolves around a PO (and, hopefully, a no PO, no pay policy), may or may not have punchout/internal/managed catalog support, may or may not support receiving, may or may not support price tiers and discounts, etc.
  • I2P, while it revolves around the invoice, it may or may not support anything beyond internal PO flip or XML, may or may not support m-way match, may or may not integrate with a payment system, etc.
  • and the same variation exists across every other category

This is assuming that the creator actually understood what every vendor offered and classified according to what the vendor’s product actually did vs. what language the vendor chose to use to describe their product.

7. Even all the vendors with comparable solutions are NOT relevant for you.

When you are considering a vendor, at the very least you have to consider

  • the verticals/industries their solution was designed on, and designed for
  • the organizational size they were developed for

and a host of other considerations based on your industry, your organizational size, and the hole you are trying to fill.

This is why so many Source-to-Pay+ selection projects end up not (fully) delivering and why most big consultancies just keep recommending the same-old same-old five (5) (big) vendors regardless of what your needs are, because they don’t know any different and at least those vendors will be around tomorrow. And this leads into a bigger discussion of why these logo maps, like most analyst maps, are NOT appropriate for transformation projects. Which we’ll take up in our next article / rant.

Secure Download the PDF!  (or, use HTTP) [HTML]
(5.3M; Note that the Free Adobe Reader might choke on it; Preview on Mac or a Pro PDF application on Windows will work just fine)

* and the doctor would like to make it very clear he had NOTHING to do with the current interface and presentation of Solution Map; it’s likely many of the questions are still his, but to be valuable, SolutionMap has to be properly scored and the ratings properly compared and applied relative to a number of factors not explicitly captured in the map

The Sourcing Innovation Source-to-Pay+ Mega Map!

Now slightly less useless than every other logo map that clogs your feeds!

1. Every vendor verified to still be operating as of 4 days ago!
Compare that to the maps that often have vendors / solutions that haven’t been in business / operating as a standalone entity in months on the day of release! (Or “best-of” lists that sometimes have vendors that haven’t existed in 4 years! the doctor has seen both — this year!)

2. Every vendor logo is clickable!
the doctor doesn’t know about you, but he finds it incredibly useless when all you get is a strange symbol with no explanation or a font so small that you would need an electron microscope to read it. So, to fix that, every logo is clickable so you can go to the site and at least figure out who the vendor is.

3. Every vendor is mapped to the closest standard category/categories!
Furthermore, every category has the standard definitions used by Sourcing Innovation and Spend Matters!
the doctor can’t make sense of random categories like “specialists” or “collaborative” or “innovative“, despises when maps follow this new age analyst/consultancy award trend and give you labels you just can’t use, and gets red in the face when two very distinct categories (like e-Sourcing and Marketplaces or Expenses and AP are merged into one). Now, the doctor will also readily admit that this means that not all vendors in a category are necessarily comparable on an apples-to-apples basis, but that was never the case anyway as most solutions in a category break down into subcategories and, for example, in Supplier Management (SXM) alone, you have a CORNED QUIP mash of solutions that could be focused on just a small subset of the (at least) ten different (primary) capabilities. (See the link on the sidebar that takes you to a post that indexes 90+ Supplier Management vendors across 10 key capabilities.)

Secure Download the PDF!  (or, use HTTP) [HTML]
(5.3M; Note that the Free Adobe Reader might choke on it; Preview on Mac or a Pro PDF application on Windows will work just fine)