Category Archives: Technology

Technology Sustentation 78: e-Privacy

Hot on the tails of data loss, comes the issue of e-Privacy. Privacy is a good thing, and e-Privacy is a better thing, but that doesn’t mean it’s not an eternal damnation to Procurement. Why?

As per our post on the technological damnation of data loss,

  • customers are always demanding more privacy rights,
  • oversight requirements are increasing as regulatory acts are multiplying, and
  • the technological sophistication required to achieve an acceptable level of security and privacy safeguards is now through the roof.

Add this to the customer fear combined with a lack of the technological understanding of the underlying security requirements to achieve e-Privacy, and it’s a very difficult damnation for Procurement to tackle. But that does not mean that e-Privacy is not capable of being tackled. Where do you start? First of all, prevent against data loss using the techniques in that post. Namely:

1. Identify the subset of data that needs to remain private.

Name, government identification number, medical record, etc.

2. Identify the systems necessary to process that data.

HR, Payroll, etc. Make sure the systems are secure, encrypt all the sensitive data stored in the application or the databases they access, and only decrypt the data for the properly authorized individuals.

3. Make sure all access to private data is logged and auditable.

And, most importantly, backed up in secure off-site backups.

4. Make sure that only the private data that is truly necessary is maintained in application systems.

Maybe you needed to do a full drug check, credit check, etc. on a potential employee as part of the hiring process, but besides “drug free” and “acceptable credit score”, does that data need to be maintained? No. Similarly, only a health practitioner needs full medical records.

5. Be sure to inform consumers of the measures you will take to protect their data.

A little education goes a long way.

Technological Sustentation 86: Template Mania

While template mania isn’t nearly as bad of a damnation as Big Data, Cyberattacks, Spreadsheets, Dashboards, and The Cloud, it’s a damnation nonetheless. Why?

Let’s start with the definition of a template. A template is defined using, well, any one of a dozen different definitions, including the following found on Wikipedia:

  • a pre-developed page layout in electronic or paper media used to make new pages with a similar design, pattern, or style;
  • a standardized non-executable file type used by computer software as a pre-formatted example on which to base other files, especially documents; and
  • a master page on which you can globally edit and format graphic elements and text common to each page of a document.

But none of these help Supply Management. Consider the definitions of templates commonly used by Supply Management vendors, which include, but are not limited to:

  • RFX templates to quick start sourcing projects for common or previously sourced categories
  • Strategic Souring Decision Optimization templates for pre-defining models
  • Data collection templates for analyzing surveys using BI tools
  • Scorecard templates for supplier performance monitoring
  • Workflow templates for setting up a sourcing project
  • Workflow templates for (automatically) approving invoices

And, by now, you should be thoroughly confused. And that’s the point. Extreme proliferation makes it hard to even identify what a template is. Even if we can define what a template is, it’s hard to know when it can be used. And even if we know when a template can be used, we don’t often know the right one. So how can we overcome this damnation and get through it.

1. Identify Where Templates Can Be Used

Templates can be used in spend analysis, sourcing events, contract creation, procurement monitoring, supplier monitoring, and related tasks. Start here.

2. Have Experts Identify the Right Templates for Each Instance

Have the experts in the organization identify the right templates for each area. For example, there are “canned reports” that can be used to jump-start any spend analysis effort, standard workflows / RFIs / lot structures for sourcing events that have been repeatedly found to work well, standard templates that legal starts with for templates, well known KPI-scorecards that effectively monitor Procurement progress, and best-practice supplier scorecards for strategic and tactical suppliers by vertical. Create and adopt these where needed.

3. Adopt Platforms that Embed the Templates into the Process

Now, considering that some platforms have customers with 1000+ spot-buy templates, 100+ category templates, and 200+ RFIs tied to verticals and supplier type and category, the number of templates the organization will have after step 2 will be overwhelming unless they are embedded into a platform that, using known data, guides the user to the rather small set of templates appropriate to the situation at hand, possibly by way of a few supplementary questions embedded in a wizard-guided workflow. The user should not have to search for a template, the platform should present the right template(s) based on the situation. Only then do templates become a blessing rather then the curse they have historically proven themselves to be.

Claritum – Medicine for the Procurement Soul, Part II

As per part I, while Claritum might sound like the latest miracle drug for the sinus, it’s really the latest miracle drug for Procurement — and when SI says miracle, it’s because, properly used, it really does work.

So what does Claritum cure? As per Part I, Claritum is the cure for SOOM. (SOOM, not VOOM.) Spend Out Of Management. How does it cure this? By providing a platform for spend not typically captured by the traditional Sourcing or Procurement platform so that the spend can become spend under management. This way, unless it’s spend that has to be made off site (at an event, during travel, etc.), or the buyer wants to keep the spend out of the system (because he doesn’t want the preferred product or wants to hide what the spend truly is for as long as possible), it can be made through the system that supports a process to get the right product or service at the right price.

Claritum provides a consumer shopping site solution that can be offered by the organization’s Procurement department, their service provider, or GPO. This shopping solution offers the traditional product catalogs that you will find on consumer sites like Amazon and competing provider catalog sites. It also contains standard rate-card service requisitions that you will find on (contingent and service) labour management platforms. Plus, it contains (the ability to create) template requisitions for all standard tail-spend categories, which can be searched and added to the “cart” as easy as standard catalog items. And, as expected, it contains free-form RFX ability for buyers to requisition anything not already covered. Basically, everything that can be bought through a platform can be bought through the platform and the only spend that should not be captured is on-site T&E spend (tickets for travel can be requisitioned through the platform, and the senior buyer responsible for T&E can process the request, create the PO, and then there is a PO to match the p-Card payment to) and on-site event spend, which should be a very low amount of tail-spend.

Now, this might not sound that special, as providers like IBX and Deem offer a lot of this capability, but this is just the surface of the Claritum platform. First of all, the Claritum platform was designed with multi-organizational use in mind and can be administered by a GPO who manages contracts for multiple clients, who can customize the catalog and offerings to the need of each client individually. Second, the RFX management process, which is tightly integrated into the catalog, is very deep and the requisitions can be set-up to make sure the right requests go to the right buyers and then the right approvers, and the right buyer can select the right suppliers, manage the process, select the winner, and send it back to the requisitioner who can then complete the process (and confirm the need) by adding the award to the cart, and checking out, which sends the request to the proper approver(s). Third, the API allows the platform to be integrated with all organizational ERPs, AP systems, and supplier catalogs, to make sure the right data gets into and out of the system. And fourth, and this sets it apart from all its competitors, it has the ability to manage stock inventory within the platform. Items come from the stock-room (or supplier store-room) first before requests for new shipments are made. And that stock-room inventory, including automatic replenishment rules, can be managed by an internal inventory manager, the GPO, or the vendor, depending on where the stock is located and who is (contractually) required to manage it.

Considering that many big organizations use GPOs or service providers for at least a portion of the tail-spend, it only makes sense to have a platform that can be managed by those same providers for the portion of tail-spend they manage. The Claritum platform is the only one that SI has seen that truly has these three components. The buyer store. The deep sourcing and procurement platform (which can be internal to Procurement, external in the GPO, or managed jointly). And the full featured supplier portal.

So if you want to get your tail spend under management, the doctor recommends that you check out the Claritum platform today. It really is worth a close look, even if you already have a S2P platform, because the extensive API will support integration and the ability to capture organizational spend outside of Procurement is the next big savings opportunity in many organizations. And if you have the choice of platform, Claritum is the one that should be Stuck With You.

Technological Sustentation 92: Data Loss

As we said before, this is the information age and data is the life blood of the company and the supply chain that powers it. The financial chain is powered by data. Encrypted bits over secure channels control the flow of currency. The physical flow of goods is dictated by data. The people controlling the goods and finances communicate through data packets. And losing any of this data is a serious damnation. Not just because data is lost but because, as per our technological damnation post on data loss,

  • lost intellectual property data is a loss of competitive advantage,
  • intrusions that result in lost or stolen data are hard to trace, and
  • even if the intrusions are traced, loss is hard to recover.

Moreover, even if an organization wants to prevent data loss, it requires

  • very powerful, expensive, digital vaults and
  • loads of security training, awareness, review, and enforcement.

So what can an organization do?

First of all, figure out what data is needed, and, of that data, what data needs to be protected. Not all data is critical, and not all is even needed, and the amount of data that needs to be encrypted is typically much less than the entire kit & caboodle. While many organizations do not protect enough data, especially considering the amount of data that should be protected under privacy laws, those that take data protection seriously protect too much. They take a military approach and everything is protected until reviewed and released.

The only data elements that should be protected are

  • personal data
  • (raw) financial data (even if the company is public)
  • true trade secrets (proprietary designs, upcoming marketing plans, etc.)

Bids for commodities or lanes are not trade secret, or all that private. Most carriers give the same bids out over and over again, and some even on public platforms like FreightOS. Purchases might seem trade secret, but the reality is that if the components are imported, the import data is public. Sales can be figured out from public records too. Sales and marketing plans become public the minute they are implemented. Designs become public the minute they are patented. Even though encryption can theoretically be applied to all data, the reality is that once data leaves the secure server, there’s no way to keep it secure. So what do you do?

1. Identify the subset of data that truly has to be secure.

All employee and personal data. Raw financials. Designs under creation. But not public bids, designs that have been patented, or processed financials for public release.

2. Identify the systems necessary to process that data.

And find web-based systems that allow for all parties that need access to the data to access it through the system over the ‘Net. Make sure the data never has to leave the system for the parties that need it to do their jobs and then make sure that only senior administrators or officers of the company can actually export that data. Make sure the systems support distributed real-time failover to backup instances so that they are always available.

3. Make sure all access to data that needs to be secure is logged.

There should be complete audit trails, replicated to external back-ups accessible only by bonded administrators and senior directors of the company.

4. Make sure all of the data is backed up externally using the highest level of encryption available.

It’s not just the audit logs that need to be stored off site, it is the critical data as well. While one site might be taken offline, and even compromised, the chances of multiple geographically remote sites being taken offline or destroyed simultaneously are slim to none.

5. Make sure all exported data is watermarked.

Using embedded and hidden watermark algorithms. It’s easy to embed watermarks in most document formats, and while it’s also possible for hackers to remove them from non-image files, it’s not easy and if no one knows the watermark is there …

While even the strongest encryption can be theoretically hacked, and any exports stolen, if the right infrastructure is set up, the risk of data theft is small and the risk of complete data loss almost zero. But one has to carefully plan and set up the right infrastructure, or just like a middle aged man, the organization may find it’s hair today, gone tomorrow.

Claritum – Medicine for the Procurement Soul, Part I

While Claritum might sound like the latest miracle drug for the sinus, it’s really the latest miracle drug for Procurement — and when SI says miracle, it’s because, properly used, it really does work better than expected.

So what does Claritum cure? SOOM. (Not VOOM, SOOM!) Spend Out Of Management. How does it cure this? Before we can answer that, we have to identify the main types of SOOM.

If Spend Under Management, SUM, is typically spend that is (strategically) sourced or requisitioned/ordered through the e-Procurement system (by way of a catalog, punch-out, requisition, or spot-buy) and tracked then SOOM is, simply put, everything else. What does this everything else look like?

  • maverick spend
  • one-time buys (for promotions, special projects)
  • print/packaging
  • Travel & Expense (T&E)
  • Event
  • MRO
  • Marketing Services
  • Uniforms and Apparel
  • Furniture
  • office products / consumables
  • low-dollar services and temporary labour
  • unique needs not met by current suppliers
  • misc. p-Card spend, including the strip club bill

Essentially, it is the “tail” spend of the organization (especially if it shows up on the p-Card of a certain executive or salesperson). In an above-average organization, this will typically be 20%-ish of spend. In a below-average organization, with a lot of spend managed by various departments and a lot of maverick spend, this could be 40%-ish of spend.

In other words, SOOM is everything Sourcing hasn’t sourced and Procurement can’t manage. Why can’t Procurement manage the spend? Let’s take the examples one by one.

  • one-time buys (for promotions, special projects)
    there is no RFX template, so the system is just by-passed
  • print/packaging
    thesystem isn’t set up to handle print jobs, so the staff just goes to staples or office depot
  • Travel & Expense
    there is no T&E platform support, so everyone just uses their own credit cards and expenses a month to three later because it’s easier
  • Event
    event management has unique requirements, and so is done offline
  • MRO
    service calls are unplanned, parts are bought as needed, and janitorial supplies are too insignificant for sourcing
  • Marketing Services
    marketing statements of work and account management requires special support, not in a standard RFX, so the tool is again bypassed
  • Uniforms and Apparel
    sizes, colours, etc. aren’t on the standard RFX, and it’s one time, and it’s easier to order through the supplier site, so that happens
  • Furniture
    it’s a one-time buy, so just go to the furniture store, put it on the p-Card
  • office products / consumables
    there’s no simple reorder form, so it’s simple to just have the accounts manager ship and bill you the monthly order and pay on the p-Card
  • low-dollar services and temporary labour
    it’s easier to call up the temp labour agency or the consultancy of choice, have them send the resource, and bill you later than try to go through the process
  • unique needs not met by current suppliers
    since the system isn’t set up for supplier discovery, you do the web search, have a few chats, find a supplier you feel comfortable with, have them ship the products, send the invoice, and then you instruct AP to pay it upon goods receipt
  • misc. p-Card spend, including the strip club bill
    for anything non-standard, if the p-Card is accepted, it is easier, especially if it’s spend you want to hide the spend until it’s too late for the organization to do anything about it (and there is a process that allows you to do so)
  • maverick spend
    for anything the buyer wants to break the rules for

In other words, the main reasons Procurement can’t manage the spend are:

  • the buyer doesn’t want the spend managed,
  • the process doesn’t support the spend, or, primarily,
  • the Sourcing and Procurement platform(s) don’t support the spend.

And that’s the kicker. Most platforms have been designed to capture the strategic or high-volume spend and customized to that, following the 80/20 rule under the assumption that most of the savings is in the top 80% which has the volume leverage and supplier relationship leverage. And while this is mostly true, especially since advanced sourcing can save an average of 10%, indicating that there is 8% potential savings, this 8% savings is only achievable over a 3 year timeframe, as most organizations only strategically source about 1/3 of their spend annually. In other words, an average organization repeatedly sourcing the same spend only saves about 3% annually. What goes unnoticed is the bottom 20% of spend which, due to lack of analysis and effort, typically contains an overspend of 10% to 30% (with an average overspend in the 15% range). This is significant. 15% of 20% is 3%, about the same as an organization pushes to the bottom line with strategic sourcing. And this spend is made every year, and this savings, if the spend could be managed, is available every year. If I’m losing out on 50% of my savings, I Want A New Drug!

So if you had a platform designed for this tail spend, which supported the right processes needed by the individuals who contribute to tail spend, most of this spend could be captured. And that’s what the Claritum platform is designed to do – capture all of the tail spend that buyers throughout the organization need to make. How does the Claritum platform do that? Come back for Part II.