Category Archives: Technology

Contract Lifecycle Management II: Do You Know Where It Starts and Ends?

In our last post, we introduced you to CLM, short for Contract Lifecycle Management, which is arguably one of the most uninspiring acronyms in the Supply Management space, but also one of the most important as it overlaps S2C (Source-to-Contract), P2P (Procure-to-Pay), and, as a result, S2S/S2P (Source-to-Settle/Source-to-Pay) as well as intersecting with risk management, performance management, change management, and supplier (relationship) management. In other words, CLM touches almost every aspect of Supply Management and is taking a central place in your Supply Management organization. But where exactly does it start and where exactly does it end?

The short answer is that it starts with data and ends with data. For example, in order to identify contract opportunities, spend, product, and service data is needed. To create good specifications, good data is needed. Authoring requires contract clauses in a clause data library. Contract Management requires term and obligation data. Performance management requires performance data. Risk Management requires event data. And so on.

However, in between, it includes the usage of that data in various obligatory, performance, organizational, and strategic processes designed to extract value from the contract. These processes make use of an extensive data repository and support organizational commercial performance management (that takes CLM to the next level).

The repository will contain clauses, templates, contracts, supporting documents, amendments, and metadata. This will support the authoring, negotiation, signing, and implementation of the contract, where the implementation will require monitoring, management, and corrective action. It will also track, and support expiry, closure, review, and, where appropriate, renewal. And, collectively, each of these activities will be seamlessly blended together to support Commercial Performance Management.

How? That’s what the first-of-its-kind co-authored CLM series by the doctor, the prophet, and the maverick will answer over on Spend Matters Pro [membership required], after it presents “The CLM Wheel”, which is the first accurate graphical representation of the continuous CLM process at a high level. Go check it out and then we can begin to address the question, which will involve first going back to the beginning in our next post.

Technology Damnation 94: New Industrialization Era

Progress is good. Innovation is good. Invention is good. Until it destroys your business model. And that’s what’s about to happen, because unless the supply chain can adapt, the organization won’t survive. Because it’s going to be spotted by the supply chain first, it’s going to impact the supply chain first, and it’s going to distort the supply chain first. In fact, the new industrialization era is already revolutionizing global supply chains, and if your company hasn’t caught up, it may soon end up in the obituaries. Even some of the largest companies in history couldn’t survive the changes brought on directly and indirectly by technological shifts, including the South Sea Company (which was, adjusted for inflation, the third largest company in history in 1720), the Mississippi Company (which was, adjusted for inflation, the second largest company in history, also in 1720), and the Dutch East India Company (which was the largest company in history, adjusted for inflation, in 1637). These were all bigger than Apple, Microsoft, Google, and Facebook — which could all become blips in future decades. And even if you survive, you can fall from great heights to obscurity. Consider the Hudson’s Bay Company, founded in 1670. It’s still around, and has assets worth almost 8 Billion, but even a considerable number of Canadians aren’t likely to mention it, if they even know if it, if asked for prominent Canadian companies, instead citing companies such as Tim Hortons (sold again for 11.4 Billion last year), Imperial Oil, the Canadian National Railway, and Rogers (if they don’t realize that our biggest companies are actually are banks).

Three changes in particular are going to disrupt your supply chain in the near term, so if your supply chain is not ready, it better get ready. In no particular order they are:

3-D Printing

Those of you following SI’s landmark series on The “Future” of Procurement and the “Future” Trends Expose which basically clarified once and for all that the vast majority of “future” trends that were being touted by the average analyst, blogger, speaker, and vendor were actually trends that were years old, decades old, and, in some cases, centuries old and that while a handful were still relevant (as they are still emerging and only affecting the leaders), only a few trends being touted as “future” trends were actually recent enough to still fall into that category. One of these was 3-D printing.

As stated last September, while 3-D printing is not a new technology, as this year is its 30th anniversary, it was only in the last decade that it became accessible to more than a handful of businesses and only within the last few years that it has become widely accessible and affordable. Now that the technology is becoming mainstream, it’s entering a rapid maturization phase in which it’s going to become better, faster, cheaper, and infinitely more powerful. As a result, prototyping is not only going to become more rapid, but more powerful. Engineers will be able to iterate through multiple prototypes in rapid succession without having to wait six (6) weeks for the next iteration from the plant in China. Not only will this support the increasingly shorter and more complex product life-cycles, but it will help reduce failure risk and associated costs, and increase innovation potential as now you can try the product before you commit to a production run.

Robotics

Robotics is not new, and many factories, such as automotive plants, have been investing in automation for decades. But recent increases in computing power, hardware production, and control systems coupled with open source systems such as Arduino have revolutionized the ability for even garage start-ups to build elaborate control systems, create advances in robotic automation, and even unmanned vehicles for air, sea, and inhospitable (volcanic) environments. Space age developments can literally be done in a garage workshop. So it won’t just be your largest competitor that you have to fear, but an unknown start-up that can revolutionize a production process and decrease the cost of production by orders of magnitude.

Bio-Plastics

Bio-plastics are new age plastics that are derived from renewable biomass sources that are more environmentally friendly (as they are biodegradable) than petroleum base plastics. Although they are currently more costly, and in some case, more environmentally damaging to produce than traditional plastics, the inflection point is coming and then your competition is going to have cheaper packaging that is more accepted by the market than you. And while the focus now is on packaging and industries like electronics and automotive where injection moulding is required, they could even have applications in medicine. Think about liquid bandages. Variations of bio-plastics might lead to the (accidental) discovery of better, and safer, polymers. Bio-plastics might have less risk of leaking when used in casts. And so on.

And this is just the first wave of disruptive innovation that your supply chain has to deal with. More waves are coming. While progress is wonderful at a societal level, for those organizations not ready, it’s damning since the very nature of innovation means that for something new to emerge, something old has to die.

Technology Damnation 89: IP & Patents

Intellectual property and patents are a good thing, right? They protect your inventions and prevent your competitors from stealing your innovation and making money off of them, right? Wrong. That’s the theory, anyway, but the reality is considerably different. They don’t stop your competition from stealing your ideas and inventions, they only give you the right to go after your competitors in court for damages if they steal your inventions. And moreover, they make it easy for your competitors to duplicate your invention.

Remember, in order to patent an invention, you have to completely define the invention in enough detail for someone to easily reproduce it. (And it clarifies why many companies would like to keep as much as they can trade secret for as long as they can.) It’s like handing a car thief the keys to your brand new custom made Ferrari and asking him if he’d like a joyride.

But that’s not the worst part. Let’s say your competitor fully replicates your invention and starts selling it to your customers and making all the profit. Your only recourse is a lawsuit, and if your competitor is bigger than you, has deeper coffers, and more expensive lawyers, it’s going to be an expensive lawsuit. Even if you know you are in the right and there is a very good chance that you could recover legal fees in the award (after multiple appeals), you might not be able to afford the suit. In fact, even initiating a lawsuit might bankrupt you.

But this is far from the worst of it. The worst of it is that many companies file, or buy, patents not to protect their IP, but to prevent you from selling yours (and this has been going on for a decade as per SI’s classic post on how the patent pirates will plunder away. Since patent clerks are not experts in anything but the rules associated with filing patents, and the reviewers are typically not experts either, many patents that are much broader than they should be, and that actually patent innovations that exist in prior art as part, or all, of the invention, get pushed through by firms with big pockets and persistent lawyers. These patents are then used by companies, known as patent trolls, with no intention of actually developing or selling such products to go after companies with similar technology, like yours, for patent infringement, even if these technologies and companies are not actually infringing the patent. The idea is that, since you know how much a patent lawsuit will cost, you’ll simply cave and pay a small license fee to “license” the patent you are not already using. These patent trolls know that all they have to do to bring you to court (in Marshall, Texas) is make a reasonable sounding (not reasonably effective) case to a non-technical judge who will allow them to bring you before a jury. Now, it is true that the US is finally trying to put a stop to these trolls (who make the nasty trolls who live under bridges look like oversized benevolent gnomes) with a a new bill (S. 1137) that requires that trolls not only stipulate what patents are being infringed, but precisely how, before a case can be filed (and prevent filing of vague claims that are enough to get you on a Texas or Delaware docket on-demand) (and also requires that all claimants be listed and expensive discovery delayed until prosecution has progressed). It’s a good start, and will minimize the tens of billions of dollars of damage these trolls do every year (as these trolls do over 1 Billion in damage to the economy every two weeks as summarized in this post on how the US is still letting the patent pirates plunder away), but you know that, since the bill already passed the US Senate Judiciary Committee, the patent trolls already have their legal team looking for loopholes to use against you.

The reality is that the US is just not as smart as the EU Parliament, which quashed the Computer Implemented Inventions Directive 648 to 14 when it was introduced (and a significant portion of bullsh!t patents these days are computer related), and, for a big enough payday, the patent lawyers will become more and more creative and manipulative. Since the US allows business process patents (which, in the doctor‘s view, is a bullsh!t patent), this insanity is here to stay. So, you’re damned and you have to play the damnation game (and spend tens, if not hundreds, of thousands filing your own bullsh!t patent just to prepare a defense against the bullsh!t claims you know are coming if you get big, or threatening, enough).

Twenty Years Ago Today

The Boeing 777 entered service as the world’s largest twinjet. This particular twinjet had a number of different variants, including the 777 Freighter which was an all-cargo version that had a payload of 103,000 kg (226,000 lbs) and a range of 9,070 km at maximum payload.

While not the capacity of the 747 200F which could handle a MTOW of 378,000 kg, which had a range of about 8,000 kms at full payload, the improved operating economics not only offered new options for long-range, lower-cost air freight.

It was yet another advance in the long line of aircraft advancements leading up to the recent 787 Dreamliner which, despite being a prime example of a supply chain fiasco as chronicled in Supply Chain Digest’s “The Boeing 787 Dreamliner: A tale of TERRIBLE supply chain management”, is still a technological innovation.

M&A: Confusion or Clarity?

There’s been a lot of M&A in the past few years, with companies like SciQuest, Selectica, Xchanging, etc. gobbling up a number of smaller companies with offerings that the acquirer believes could be used to make a full S2S (Source to Settle) suite, and with the recent investment announcements, including this week’s announcement of an 80M investment in Coupa (at a 1 Billion valuation, which the doctor still finds unbelievable), there is sure to be a return to the M&A frenzy of the late noughts that will likely equal, if not exceed, the scale (and occasional absurdity) of the APE Circus. (Which I hope will be accompanied by a return of the Sourcing Maniacs, but alas, the doctor has not heard from them since they told us they were on their way back from their African vacation on New Year’s day five years ago.)

But will it be worth it? First of all, many acquisitions end up being overvalued. (For example, the doctor believes CombineNet is still far in the red, and this can’t be helping SciQuest.) Secondly, many acquisitions have overlap in functionality and offering. Thirdly, many acquirees often use different platforms. Right now, .NET, true C++, Java, and Ruby on Rail frameworks are all quite likely in the space and many acquisition frenzies result in a the merged company having three or more platforms to deal with.

Since, for example, a Source to Pay offering is only valuable if there is more integration than a company could achieve on its own by acquiring separate sourcing and procurement, and, if necessary, contract management and spend analysis platforms, this last point presents a major headache for the newly merged companies. Simply defining the push-pull endpoints and automating the data transfer doesn’t add that much value. A third party integrator can do that. Value comes from real-time end-to-end visibility through the source to pay process for every invoice, shipment, purchase order, contract, supplier, etc.

And the functionality overlap presents another hurdle. Each customer that uses a platform will expect all of the functionality of that platform, so you can’t even consider killing a platform component until all of the functionality is in another platform component. Not only will this take development time and effort while the organization has to support two platforms, but considerable time will be required as bruised egos try to decide which is best to keep and which to discard if both “endpoint” modules appear to be equally valuable.

And then there is the balance of how far to take integration in the short term when sales are rapidly needed to justify the expenditure, pay for the overhead loss as reorganizations occur, and support new personnel to plan development of the next version which will, someday, integrate everything on one underlying stack.

Sometimes it’s quicker, easier, and more cost effective to be patient, just build everything in house from the ground up, and go to market with a truly integrated solution which offers end-to-end visibility because it takes top talent to pull off a successful technology integration. And, by definition, not every company will have top talent with enough expertise across the source-to-pay process to make the right decisions.

the doctor is sure there will be some great success stories in a few years, but there will also be some mega failures as well. And in the interim, we’ll likely have more confusion than clarity.

Any differing opinions?