Category Archives: Supplier Management

Source-to-Pay+ Part 1: The Beginning.

Once upon a time
not so long ago …

SI ran The 39 Steps … err … The 39 Clues … err … The 39 Part Series to Help You Figure Out Where to Start with Source-to-Pay and helped you understand what each of the six core technologies in Source-to-Pay do, how to evaluate them, and the order of implementation necessary to maximize short-term results (which is the only thing the CFO cutting the check for the systems cares about). Not that it should be hard, given that, as the doctor explained, if your organization is a mid market, the answer to Per Year, How Much Should You Outlay for Source to Pay? 120K! (because Yes Mid-Markets, 120K is More Than Enough for Source-to-Pay!). That’s cheap, and if you can’t get a 10X ROI on that, the doctor would be surprised. (Yes, you’ll need some integrations and some services, and that will double or triple the price and you may only see a 5X or 7X ROI, but still.)

But the reality is, especially in today’s turbulent times (where me and my wine is not enough), even full Source-to-Pay is not enough. Risks abound, and even if your Supplier Management Platform has an Uncertainty (Risk) module, there’s more than supplier risk to worry about. There’s third party, supply chain, logistics, geographic, natural disaster, and many other risks that Supplier Risk Management, which we prefer to call Supplier Uncertainty Management (due to the lack of depth, action management, support for mitigation planning, etc. we prefer NOT to call these Risk modules), applications in Source-to-Pay typically don’t address.

Then we have Corporate Social Responsibility (CSR), Environmental & Social Governance (ESG), and Carbon / Scope 1,2,3. Today, a non-responsible company that buys from suppliers who are particularly environmentally unfriendly, don’t treat their workers well, or, even worse, use forced or slave labour is the one that gets the consumer backlash, and possibly the civil AND criminal liability (with certain jurisdictions introducing laws making the last company down the chain responsible). A company that just hoards profit and doesn’t make an effort to give back is frowned upon. And a company that stays on dirty power when there is an alternative, wastefully uses fresh water, or unnecessarily consumes non-recyclable resources in its day to day operations is just being dumb. Moreover, when you consider that Carbon Tracking is Important — But a Calculator or a Credit is Not A Solution! but What You’re Really Concerned About is YOUR e-Liability, that it’s not just about tracking, but reducing where possible, and that there are real baselines given that it’s impossible to mine, process, produce, ship, or consume without emitting carbon, it’s not easy to figure out what you need.

When you are buying direct, you have to consider the supply chain as well as the implications of a change in the supply base. The ink on the contract is when the fun truly begins. The product has to arrive on time, on budget, damage free, at the right location. This requires logistics coordination, and if the contract will change the supply base configuration, this is something that should be considered up front. So logistics/network analysis is creeping into Sourcing.

Then there is the issue of T&E — what happens when it’s put on the card, because its too small to bother with a Procurement effort (it never is, although it’s not always worth the time of a Procurement Pro, and that’s why you need an appropriate T&E/Tail Spend system to make sure the end buyer gets it right) or someone is trying to bury something that they know is not truly needed, off contract, or shouldn’t be expensed.

Plus, at the end of the day, you have to pay … and most Source-to-Pay end at the OK-to-Pay. What do you do when it’s time to pay?

And so it goes.

As such, it’s time to start another multi-part series to help you, dear reader, understand the extended Procurement landscape and what you should be looking for in such systems. We’re not going to attempt to tell you what to implement first, as that will depend upon what your biggest need is, which will usually depend on what the biggest risks are to the organization at the current time — unidentified spend, risk of supply, breaks in the supply network, forthcoming legislation, global payments, and so on. We’re just going to take an area and explore it, for as many articles as it takes. More to come. Much More.

B2B Marketplaces Have Their Place But …

… don’t look to them as a foundation for supplier collaboration! While it’s nice to see Procurement platforms and technologies getting noticed in Financial publications, the juxtapostion of the headline and subheading on this recent Financial Express article made us go “OI! YOY! YOI!”.

The headline was great:
Integration of B2B marketplaces into supply chain networks for increased efficiency

… it’s exactly what Finance needs to hear as B2B Marketplaces are a great solution for commodities or products typically bought spot-buy on the open market, and much more efficient than sending out an RFP for something you can find and buy quicker, easier, and cheaper online, and definitely better than searching half a dozen supplier sites to find the right product at the right price.

And the subheading started off great:
A notable opportunity for enhancing Supply Chain Management (SCM), as rated by 53% of businesses, lies in collaborative efforts with suppliers.

… because collaborative efforts are not only a great way to increase efficiency, but also increase value by lowering cost, increasing quality, adding capability, etc.

But the way the sub-header ended was head-scratching to say the least:
… The answer lies in utilizing user-friendly and efficient B2B marketplaces.

NO! No, No, No, NO! If you want to collaborate with suppliers, you need a modern Supplier Management solution that focuses on supplier development, innovation, and collaboration.

B2B Marketplaces were created to help buyers find (new) suppliers to buy from and to help suppliers widen their potential customer base when buyers find their products in a search and check them out. They were not setup for collaboration and the extent of “collaboration” on the majority of these platforms is asynchronous messaging. That’s not collaboration! Not even close.

In comparison, a Supplier Management platform with

  • Relationship Management will not only support asynchronous messaging, it will also support collaborative project/product plans and a best practice/knowledge base for both parties
  • True Network Management and not just an integrated online marketplace will also support a true bi-directional graph, bi-directional search, classification, and anonymous (peer)
    reviews
  • Proper Discovery will not only support simple searches, but deep location, product, capability, and multi-factor searches; proactive web-search and web-site monitoring; anonymized ratings and reviews; and deep product sheets and history management
  • Orchestration Management will support multi-tier linkages, cascading onboarding, and multi-tier supplier support so that you can quickly and easily onboard the supplier onto your own personal Supplier Management instance that you can customize to your liking
  • Enablement Management will add an integrated supply-centric portal, sustainability guidance, and true supplier-led innovation support

In other words, this article, which could have focussed on the core value of B2B Marketplaces and introduced them as a first step into the Procurement world, with an entire suite of valuable tools to help an organization, missed the mark.

For more information on what a proper Supplier Management platform should do, as well as a list of vendors who offer these platforms, see parts 15 to 20 of our The 39 Steps … err … The 39 Clues … err … The 39 Part Series to Help You Figure Out Where to Start with Source-to-Pay.

Supplier Management

Part 15: Supplier Management is a CORNED QUIP Mash

Part 16: Supplier Management A-Side

Part 17: Supplier Management B-Side

Part 18: Supplier Management C-Side

Part 19: Supplier Management D-Side

Part 20: Over 90 Supplier Management Companies to Check Out

It Doesn’t Matter Where You Start, You End with BoB in SXM!

In a recent article, we asked in the battle of Suite vs. BoB (Best-of-Breed), which do you choose, and ended up with the answer of neither, but potentially both, because, as indicated in our article we asked in our post on Where’s the Procurement Management Platform, you need a true platform (that enables the creation of a true source-to-pay plus ecosystem for the various workflows and processes that need to be managed).

As a result, we indicated you could start where you wanted, provided:

  • you could conceivably manage it (if you don’t have any reasonably modern e-Procurement applications, expecting you can dive into more than a couple, learn them, and incorporate them in your daily processes in a short-time frame is completely unrealistic, so you shouldn’t buy from a suite vendor unless you can activate modules over time as you are ready for them)
  • the vendor offers, and publicly publishes, a complete Open API that, at a minimum, can be used to import and export all data the platform supports and should support the execution of core functions (so that you can script in a related module a date/time-based import/refresh process, re-execution of a core function/calculation, and retrieval of updated results)
  • the vendor offers the necessary quick-start services (you need to be able to get going quickly — if it requires a 3 to 6 month onboarding process, you’re dead in the water before you begin from both a first year ROI and adoption perspective)

But where do you end up? It depends. On what:

  • the module (Spend Analysis, Sourcing, Contract Management, Supplier Management, e-Procurement, e-Invoicing/AP, etc.)
  • the organization’s biggest need for workflow/process management
  • the organization’s biggest savings/cost avoidance/value creation opportunities

And for some modules, like e-Procurement, standard sourcing (no optimization/automation), AP (accounts payable), it’s quite hard to make the case for one over the other for an average organization (as it’s not how many features, functions, bells, and whistles, but which of those will actually add value to the organization acquiring the solution).

But for others, it’s crystal clear. And the clearest case is Supplier Management. Why? As per our recent article in our Source-to-Pay+ Series, Supplier Management is a CORNED QUIP Mash, and there’s no way that a suite, which is typically only average across-the-board, is going to be deep enough for the key functionalities needed by an organization (and the majority only address SIM reasonably well, with limited SRM-related capabilities). In fact, you’re not even going to find a single BoB provider that provides leading functionality in more than a few areas of what supplier management can encompass (especially if an organization needs quality, enablement/innovation, orchestration, or other specific direct or service support requirements, etc.). (So do you think you’re finding a suite that does everything? Not a chance!)

So you can start with a suite (that serves as a foundation for comprehensive SIM), or even a module from a BoB provider (that likely provides baseline Supplier Information Management as a Sourcing/CLM/Analytics add-on), but if you are serious about improving supplier performance (quality, compliance, cost of service), you will eventually progress to one (or, for extensive, different, Supplier Management needs, multiple) BoB solutions.

Sustainability Begins in SRM

We recently broke records in global temperature. RECORDS IN GLOBAL TEMPERATURE! If sustainability isn’t on your mind now, then obviously you don’t have a mind that is working because not only does it mean the planet is in very dire straits*, but

  • the acceleration of natural disasters is going to intensify beyond anything that was predicted (and a five-fold increase was recently predicted)
  • natural resources (and food) are going to get scarcer faster as fires destroy our usable lumber and crops
  • hurricanes are going to drench and destroy coastal cropland, possibly long-term
  • rapidly melting polar ice caps are going to raise sea level, drown our richest coastal farmlands, and damage our coastal (shipping) infrastructure
  • rapidly heating equatorial zones are going to dry out our freshwater lakes and canals (like the Panama canal we rely on for shipping)

… and that’s just the tip of the rapidly melting iceberg. (There’ll soon be no more dildo icebergs for Dildo, and that won’t be a good thing. Canadians rarely get angry, and when they do, that’s bad. the doctor, who is about as Canadian as it gets, has never seen a Newfoundlander angry, and when that day comes, he’d rather not be one province away … so please make sure that day never comes!)

Unless we lower

  • fossil fuel energy production and utilization
  • clean water utilization
  • waste byproducts
  • dependence on non-renewable resources that are getting more expensive, and environmentally damaging, to mine

environmental and societal damage is going to only intensify. We need to be sustainable. But sustainability has to start at the source — and the consumer is NOT the source (it’s the sink, and anyone who’s studied networks will tell you that by the time you reach the consumer, the product has been produced, the service has been rendered, and there’s nothing consumers can do to undo the damage that has been done … sure we can do our best to consume less and waste less, but the damage starts at the mine or the farm and propagates through the supply chain).

As a result, sustainability starts with the source supplier, and must be maintained throughout the entire supply chain.

And at the end of the day, for a Fortune 500 / Global 3000, it doesn’t matter if a CEO gives up the corporate jet — it matters only if they instruct their company to be sustainable in all aspects of operations and force their supply base to do the same.

Why? The aviation industry as a whole contributes 2.5% of worldwide CO2 pollution. 2.5% overall! So how much do you think one private jet contributes? Not enough to really matter. (On average, it’s like removing the emissions of 400 cars, and while that sounds significant, once you realize there’s over 300 million registered vehicles in North America that contribute to about 30% of GHG produced, it’s barely a drop in the CO2 bucket [giving it up for show while your factories pollute unhindered is not the solution]; and FYI, most of that vehicular CO2 production is NOT our private automobiles, its commercial transportation [as we have catalytic converters, there’s no laws that can be enforced mandating equivalent technology on ships in international waters].)

In comparison, a coal burning energy plant will generate about 2.26 pounds of CO2 per kWH, or about 7 Billion pounds of CO2 annually (which is over 3 Million Metric Tonnes) in an average 500 megawatt coal power plant. (In comparison, a private jet burning an average of 5,000 pounds of jet fuel per year at 7 pounds of carbon dioxide will produce only 35,000 pounds of CO2 a year. This is still a lot, but a supply chain that consumes the equivalent output in electricity in its manufacturing and shipping operations as that produced by a coal burning 500 megawatt power plant will produce 200,000 times the CO2. TWO HUNDRED THOUSAND TIMES. So don’t get distracted by the little things in your quest for improving your carbon footprint, which will soon be mandated in more and more countries globally. Your CEO should give up the jet, especially when he can still fly in those first class cabins no one else can afford, but that’s just the start of what your organization needs to do.)

And the only way to monitor and manage your supply base, require and track reporting from, and ensure improvements are made, is with SRM. It’s not just supplier development anymore, it’s supplier sustainability.

* and not the good kind of Dire Straits, the bad, bad, kind

The 39 Steps … err … The 39 Clues … err … The 39 Part Series to Help You Figure Out Where to Start with Source-to-Pay

Figuring out where to start is not easy, and often never where the majority of vendors or consultants say you should start. They’ll have great reasons for their recommendations, which will typically be true, but they will be the subset of reasons that most benefits them (as it will sell their solution), and not necessarily the subset of reasons that most benefits you now. While you will likely need every module there is in the long run, you can often only start with one or two, and you need to focus on what’s the greatest ROI now to prove the investment and help you acquire funds to get more capability later, when you are ready for it. But figuring out how much you can handle, what the greatest needs are, and the necessary starting points aren’t easy, and that’s why SI dove into this topic, with arguments and explanations and module overviews, both broader and deeper than any analyst firm or blogger has done before. Enjoy!

Introductory Posts:
Part 1: Where Do You Start?
Part 2: Where Should You Start?
Part 3: You Start with …
Part 4: e-Procurement, and Here’s Why.

e-Procurement
Part 5: Defining an e-Procurement Baseline
Part 6: There are Barriers to Selecting an e-Procurement Solution (and they are not what you think)
Part 7: Over 70 e-Procurement Companies to Check Out

Interlude 1
Part 8: What Comes Next?

Spend Analysis
Part 9: Time for Spend Analysis
Part 10: What Do You Need for A Spend Analysis Baseline, I
Part 11: What Do You Need for A Spend Analysis Baseline, II
Part 12: Over 40 Spend Analysis Vendors to Check Out

Interlude 2
Part 13: But I Can’t Touch the Sacred Cows!
(including Over 20 SaaS, 10 Legal, and 5 Marketing Spend Management / Analysis Companies to Check Out)
Part 14: Do Not Stop At Spend Analysis!

Supplier Management
Part 15: Supplier Management is a CORNED QUIP Mash
Part 16: Supplier Management A-Side
Part 17: Supplier Management B-Side
Part 18: Supplier Management C-Side
Part 19: Supplier Management D-Side
Part 20: Over 90 Supplier Management Companies to Check Out

Contract Management
Part 21: Time for Contract Management
Part 22: Contract Management is a NAG: Let’s Start with Negotiation
Part 23: Contract Management is a NAG: Let’s Continue with [Contract]Analytics
Part 24: Contract Management is a NAG: Let’s End with [Contract] Governance
Part 25: Over 80 Contract Management Vendors to Check Out

e-Sourcing
Part 26: Time for e-Sourcing
Part 27: Breaking Down the ORA of Sourcing Starting With RFX
Part 28: Breaking Down the ORA of Sourcing Continuing with e-Auctions
Part 29: Breaking Down the ORA of Sourcing Ending with [Strategic Sourcing Decision] Optimization
Part 30: Over 75 e-Sourcing Vendors to Check Out!

Invoice-to-Pay (I2P):
Part 31: Time for Invoice-to-Pay
Part 32: Breaking Down the Invoice-to-Pay Core
Part 33: Over 75 Invoice-to-Pay Companies to Check Out

Orchestration:
Part 34: How Do I Orchestrate Everything?
Part 35: Do I Intake, Manage, or Orchestrate?
Part 36: Over 20 Intake, [Procurement] [Project] Management, and/or Orchestration Companies to Check Out
Part 37: Investigating Intake By Diving In to the Details
Part 38: Prettying Up the Project with Procurement Project Management
Part 39: Deobfuscating the Orchestration and Fitting it All Together