Tag Archives: procurement solutions

5 Best Practices for Raw Material Procurement

How do you leverage consolidated raw materials demand for best practice procurement? Here are five industry best practices.

This article was originally published on Supply Dynamics on October 22, 2020 and is republished here with permission of the author and website.

It takes tons – both literally and figuratively – of raw material to manufacture an aircraft. From fasteners to injected molded plastics and countless variations of metals, electronic components, and resins are needed to produce the millions of individual parts required to deliver a completed aircraft on-time and on budget. Case in point: An average commercial aircraft contains approximately 387 tons of metal alone!

If you’re an Original Equipment Manufacturer (OEM) in the aerospace industry such as Boeing or Airbus, raw material procurement and sourcing for countless parts can result in chaos. And this problem isn’t unique to aerospace. It persists across industries including oil & gas, automotive, industrial equipment, among others.

At Supply Dynamics, we estimate that our customers outsource on average 50-80% of product parts and components. This trend has resulted in complex, highly fragmented supply chains, reducing transparency for the OEMs, while increasing dependence upon contract manufacturers and their ability to manage their own complex supply networks.

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Raw Material Procurement

How many metals, plastics, electronics and fastener sources do your part suppliers purchase from? Five or 500? As long as you get your parts on time, does it even matter? Of course, it does.

As a procurement leader, you understand there are efficiencies in streamlining raw material procurement at all levels of the supply chain. What if OEMs could orchestrate the joint-negotiation and forecasting of such materials to eliminate waste and improve efficiency through a systemic process?

By value-stream mapping actual raw materials used in part production and linking that to the demand for those parts, Supply Dynamics can help you forecast consolidated material requirements and provide a dynamic snapshot of your sourcing strengths and vulnerabilities. Sharing this information with contract manufacturers and raw material sources then enables transformational collaboration.

After more than a decade of helping our OEM customers obtain and leverage this kind of information, we’ve learned a few things. In order to successfully leverage consolidated material demand across a supply chain, we recommend OEMs follow these procurement best practices:

1) Calculate and share detailed raw material demand forecasts at regular intervals with service centers and mills

By sharing what we call a “material demand profile” with the sources of the raw material, OEMs can reduce risk for their raw material suppliers enabling them to operate more responsively, while increasing the OEMs ability to control pricing and ensure availability. Sharing a top level forecast only, with no definition of order form preferences (i.e. sheet vs coil or bar vs plate), discrete sizes and specifications, is virtually useless to a Distributor.

With such a forecast, Service Centers avoid speculation regarding which materials will be purchased or to what sizes and specifications and which site or contract manufacturers in the supply chain will purchase it. Knowing this in advance ensures service centers can stock the appropriate inventory quantities of the correct materials at the right time. This also serves to reduce lead-times. Some of our customers see their lead time reduced by 50% or more.

2) Make sure that shared forecasts contain a level of detail that reduces risk at the raw material source

If you ask a mill, distributor or standard catalog part manufacturer what really drives material prices (whether you’re talking about metals, plastics, or printed circuit board components) the answer might surprise you. While the quantity of material purchased and number of releases over time is a factor, other factors may have equal or greater impact on price, including

  • What is the accuracy of the forecast?
  • Are there limited life considerations associated with the material?
  • Are there unique packaging requirements?
  • Are there processing requirements or unique specifications associated with the order?
  • Can the customer specify quantities required by specific user, over specific time frames, and by unique sizes and specifications?

This kind of information is the proverbial “Holy Grail” for a mill or distributor because it allows them to service your business more efficiently, reducing the risk of obsolescence and allowing them in some cases to level load production and better manage inventory levels over time.

3) Establish “directed-buy” or “right-to-buy” contracts with Mills and/or Distributors

Ideally, an OEM establishes standard raw material purchasing agreements with Mills and Distributors and allows its Contract Manufacturers to purchase off those agreements. Transparency is essential to ensure that such agreements are followed.

On the flip side, if a raw material supplier cannot fulfill orders placed down the supply chain, the OEM is aware of the situation in advance and can properly address any potential delays.

An aggregation program gives the OEM significant leverage over raw material suppliers and contract manufacturers. It goes without saying, the OEM could switch suppliers should suppliers fail to deliver the promised level of service. However, suppliers are also incentivized to participate in these programs because their costs are reduced through better planning – a win-win throughout the supply chain.

4) Enforce the agreed purchasing behavior

Aggregation programs provide considerable benefits to the OEMs, contract manufacturers, and to the raw material suppliers. However, reaping the benefits depends upon all parties within the supply chain doing what they have agreed to do and properly utilizing and executing upon the agreed “terms of engagement.”

If contract manufacturers fail to purchase forecasted materials from the agreed upon source, the value of the demand forecast is questioned and the service centers are left holding the proverbial bag when it comes to excess inventory. For this reason, it is imperative that the OEM have a robust means of monitoring and enforcing agreed upon terms of engagement (across Contract Manufacturers, Distributors and Mills.)

5) Provide a means to validate material sizes, forms and specifications while keeping bills-of material up-to-date 

No two Contract Manufacturers make a part the same way and therefore no two bills of material (even for the same part) are ever the same. For this reason, the OEM must provide a simple, easy way for Contract Manufacturers to update or “validate” bills of material.

For example: Say an OEM needs 1,600 pieces of a specific aluminum part in the coming year. The blueprint suggests that the optimal way to manufacture the part is to machined it out of an 8.0” long piece of aluminum grade 6061, 2.0” diameter round bar. However, the minute the OEM outsources that part to an external contract manufacturers, it loses visibility into the actual form and size of material actually purchased. For instance, one contract manufacturer may choose to purchase material in different form or size than another (2.25” vs. 2.0” for example).

In addition, any sustainable program will require a thoughtful and systematic way of accommodating changes in the supply chain such as:

  • New Part Introductions
  • Engineering changes to existing parts
  • Transitions of parts from on Contract manufacturer to another

So how does it work?

We understand – this sounds like an Industry 4.0 unicorn, right? Likely, you’ve been managing your raw material procurement data with a team of folks sharing a macro-crazy Excel spreadsheet. This is where Supply Dynamics can help. Our Part Attribute Characterization service and SDX multi enterprise platform enables OEMs to captures contract manufacturers’ raw material data for each part without asking the part supplier to do all the heavy lifting.

In this way, OEMs can accurately forecast raw material requirements and manage the timely purchase and supply of material requirements across the enterprise.. All of this allows for better pricing and contract terms, shorter lead-times, and higher levels of performance from the supply chain.

For too long OEMs, contract manufacturers, and raw material suppliers have relied on historical data or guesswork to forecast future raw material demand. By better understanding the raw materials used in its products and sharing information with the sources of those materials OEMs can achieve step-change improvements in their cost of doing business, and actively monitor purchases of program-related materials. In addition, they can improve overall supply chain efficiency and ultimately improve on-time delivery of more profitable products.

Your Supplier Made The News … For The Wrong Reasons. What Does This Mean For You?

What should you do if your supplier ends up in the news? Here’s what effect it could have on you and how you should mitigate the damage.


Let’s face it, 2020 has been the year that changed everything. Anytime you even go near a media website, you’re hit in the face with the latest pandemic disasters. 

Yet the domination of the news with COVID crisis has meant that there’s little room for much else, which, strangely, may have been a blessing in disguise for some of our organisation’s PR departments – and our own supply chain obligations. From whispers that much of the world’s current PPE is currently the product of modern day slavery to suppliers who have been caught out using substandard (and even contaminated) ingredients in food, there’s mounting evidence that while we’ve all been distracted this year, supplier standards may have been slipping. And while that may not have spelled disaster for us just yet, what do we do when the news catches up with them? 

It’s not good for them, and it’s not good for you. Here’s why … and what you should do about it. 

If your supplier makes the news, will your customers blame you? 

If you think that your customers are savvy enough to distance you from the reputation of your suppliers, think again. Ever since the Nike sweatshop scandal rocked organisations worldwide, it’s been clear that if your suppliers take a fall, you will too – and it can be highly damaging, if not deadly, to your reputation going forward. Businesses are just as – if not more – responsible for their suppliers than ever before. 

Concerningly, recent research has also found that even when a supplier mishap has, in essence, nothing to do with your product quality, consumers will still start to believe that your product is inferior. This means that if you were to have something like a COVID outbreak in your factory and it was widely publicized, even if you were able to maintain production, your reputation would still be tainted in your consumer’s eyes. Unfortunately, the reputational damage occurs no matter what the issue is: even if, for example, your supplier was caught polluting or even embezzling, your reputation would be the one to take the hit. 

If this sounds terrifying, it’s because it is. Even worse, conditions are currently ripe for it to happen. With our supply chains becoming more and more global and complex, it’s becoming harder and harder to track the activities of our suppliers, let alone our second and third tier ones. And with the rise of social media, the world is becoming more and more savvy – and any issues are becoming more likely to be exposed. Take, for example, Change.org’s famous campaign against Hersheys, which exposed, through social media, the continued use of child labour in its cocoa production in Africa, and forced the company to quickly change track. 

The conclusion? If your supplier has something to hide and the media finds out first, you need to be prepared to weather the reputational and financial hit. 

If it’s just slightly bad news, does it matter so much? 

As talented and thorough procurement and supply chain professionals, most of us already have an oversight of the worst risks and issues within our supply chain – and thankfully, we’ve mitigated them. So if something small slips through the cracks, will it really matter? 

Unfortunately, yes. Firstly, humans have a predilection towards bad news. Decades of psychological research have shown that we’re all naturally drawn towards bad news, so much so that even if nine out of the ten news stories we read are positive, we’ll always remember – and act on – the negative one. What this means is that we, as supply chain professionals, need to be extra cautious about what mishaps might slip through the cracks. 

Secondly, consumers don’t rationalise the ‘degree’ of bad news. In what psychologists call the ‘spillover effect,’ consumers were found to equally condemn companies for supply chain failures, even if the news wasn’t, technically, that bad. On every occasion, bad news in the supply chain meant that consumers were less willing to buy from the organisation for an extended period of time. 

How do you mitigate the damage? 

By now, you’re probably frantically checking and rechecking all of your suppliers, terrified that something may have gone wrong. And while the response is justified, and we should always aim to have as much insight as possible into our suppliers, know this: you can mitigate the damage done if your suppliers do end up in the news for the wrong reasons. 

And the best way to do this is to simply try to help find a solution, and communicate this to all involved. 

In positive news, research into the spillover effect has found that while damage can be done quickly, it can be undone at just the same speed. Organisations that act quickly to rectify issues, for example, those who instantly clean up environmental spills or put an end to labour issues, can rescue their reputation, if they take responsibility and put mechanisms in place to do better. And while consumer’s buying behaviour may not revert instantly, if you are able to win back the trust of your customers, the damage need not be long term.  

Managing risk and reputation 

Given the complexity of supply chains these days, maintaining accountability of your suppliers has long been an issue, especially when it comes to tier two or three suppliers. Yet just because this task is challenging, it doesn’t mean it isn’t important. Thankfully, if reputational damage does occur, it is possible to reverse it. But do we want to take the risk of finding out? 

Has your supplier ever ended up in the news? What did you do about it? Let us know below.

7 Companies Pioneering Artificial Intelligence in Procurement

With so much written on Artificial Intelligence it’s hard to know where to look. However, there are companies from whom we can take our lead.

artificial intelligence
Photo from Pixabay on Pexels

Artificial Intelligence (AI) is one of the hottest topics in business right now. It’s also a bit like teenagers and sex. Everyone seems obsessed with it, everyone feels left out, few actually know what they are doing, so everyone claims they are doing it.

There is so much hype about AI we recently collaborated with Procurious on a quick AI challenge for CPOs at the Big Ideas Summit in Chicago. From their savvy answers you’ll see that many procurement leaders understand the value of AI. What we need as a community is transparency on how it affects us here and now.

The new book AI in Procurement explores many realistic use-cases for artificial intelligence within procurement. The authors Sammeli Sammalkorpi and Johan-Peter Teppala were among the first to pilot AI solutions in procurement software and scoured much of the literature available today on the topic to write their book.

Don’t worry. We won’t get in to too many details about the mechanics and jargon of AI. Before we go through the examples from procurement, there is just one thing to understand.

Artificial Intelligence in Procurement

Many people have a somewhat distorted view of AI. They may remember futuristic movies where chrome-plated androids interact in human-like ways, or computer systems that have natural language conversations.

In reality, most AI applications today are a lot more boring and inconspicuous. You’re likely to interact with AI when you search for address details on Google Maps, or look up a playlist of music on Spotify. It’s already a part of the software you use every day, but you rarely see it.

This is much the same in business. Most of the applications of AI we see in procurement come as solutions to existing problems humans have a hard time solving. They are enablers, rather than replacements to human expertise.

AI in Procurement presents the concept of “human machine collaboration” to explain how AI builds on the strengths of both humans and machines.

7 Examples of Artificial Intelligence in Procurement in 2019

Now that we’ve covered the background, let’s dive into those fresh AI examples across seven different areas of the procurement cycle.

Supplier risk management

AI can be used to monitor and identify potential risk positions across the supply chain. For example, RiskMethods identifies new and emerging supply chain risk events by handling data gathered from different sources, helping to identify emerging risks faster.

Purchasing

AI can be used to automatically review and approve purchase orders. For example, it allows employees to order office supplies without requests for approval, making the process leaner and more efficient.

To state an example, in Tradeshift’s platform a chatbot called Ada can be used to check the status of purchases or automatically approve virtual card payments, regardless of the user’s location.

Accounts Payable Automation – Machine learning is increasingly used in accounts payable automation. ML assists in identifying errors and potential fraud in large amounts of automated payments. An example of this is Stampli, which leverages machine learning to speed up payment workflows and automate fraud detection.

Spend Analysis

At Sievo, machine learning algorithms are widely used in spend analysis to improve and speed up a number of processes, including automatic spend classification and vendor matching.

For example, if you have DHL, DHL Freight, Deutschland DHL, and DHL Express in your data, the machine learning algorithms are easily able to consolidate these together as DHL for increased visibility and data coherence.

Supplier Information Management

Big data techniques enable new ways to identify, manage and utilise supplier data across public and private databases. Tealbook is one platform that applies machine learning to supplier data in order to create and maintain accurate supplier records across all systems and areas of the business.

Strategic Sourcing

AI can also be used to manage, guide, and automate sourcing processes. Keelvar’s sourcing automation software uses machine learning for the recognition The reality of AI in procurement 59 of bid sheets and specialises in category-specific eSourcing bots such as raw materials, maintenance and repair.

Contract Management

AI has many potential use-cases in contract management. Seal Software uses optical character recognition (OCR) and advanced text analytics to clean up and consolidate information contained in contracts.

We’re likely to see many more successful examples of AI shared across procurement functions in the coming years. The more we share as a community, the better we get.

If you would like to dive deeper into the topic, you can get early access to AI in Procurement as a free download before the printed book comes on sale on Amazon in 2020.

Blockchain – A New Flavour of Traceability

Why did the chicken cross the road? More importantly, was there traceability of its journey and how many miles did it cover? Maybe blockchain can help us answer this age-old question…

Courtesy of Portlandia

Do you find yourself thinking more and more about the journey your food has taken to get to your plate? It’s not just because you’re a supply chain professional. It’s because, as a community, we are increasingly interested in the origin and safety of the food we consume.

Farm to Plate – Tracked and Traced

Consumers have an increasing interest in and focus on sustainability, food miles and the concept of ‘farm to plate’. The pressure is on the supply chain to maintain quality while providing both transparency and a fully auditable trail.

Production lines can be stopped and deadlines missed. But if fresh produce doesn’t get to where it needs to be on time, there isn’t any end product.

Delayed, incomplete, incorrect or damaged shipments create a monumental volume of administration. Productivity tanks, costs mount and trust erodes as the parties enter into a “we said, they said” situation, with each party trying to avoid being the ones to blame. This has led to a situation that as the food supply chain has grown, the level of trust has diminished.

However, one of the hottest new technologies, blockchain, has proved to be an invaluable tool in helping provide transparency and maintain trust.

Network of Networks

In most supply chains, communication is point-to-point and one direction. There is no single, shared record of events across multiple parties. Damages or changes – malicious or accidental – may surface in the moment, or potentially only when they are raised by consumers.

According to research published by Gartner in 2017, there is a movement for mature supply chains to operate in a “network of networks”. The network of networks acts as a self-fulfilling prophecy, as mature supply chains in these networks achieve higher levels of maturity, including improving ecosystem visibility.

By placing a supply chain on the blockchain, it makes the process more traceable, transparent and fully digital. Each node on the blockchain could represent an entity that has handled the food on the way to the store, making it much easier and faster to identify the source of food safety issues with much greater precision.

The attributes of blockchain technology are ideally suited to networks of partners, big and small. By providing a shared, single version of the truth through a shared, digital ledger, blockchain increases trust and creates efficiencies by eliminating the “we said, they said” problem and creating a shared understanding of all possible disruptions that could impact OTIF delivery.

With blockchain, transaction records are immutable, or tamperproof, and agreed upon by all parties. Immutability creates an audit trail. Privacy is maintained by setting the appropriate levels of data visibility for different parties. And business rules are shared and enforced by the system through smart contracts.

Trust and Traceability

A prime example of the effectiveness of blockchain in the food supply chain is Walmart. The retail giant has been working with IBM on a food safety solution, using IBM’s ‘Food Trust‘ solution, which was specifically designed for this purpose.

Before working with IBM to move some of its food supply chain to blockchain, it typically took Walmart approximately 7 days to trace the source of food. With the blockchain, it’s been reduced to 2.2 seconds. This time may be the difference between a consumer eating unsafe food and it never reaching the shelves in the first place.

IBM has also played a major role in the development of blockchain tracking for another retailer, Carrefour. The organisation uses blockchain ledger technology to track produce including meat, milk and fruit from source to shelf. The technology has enabled tracking on the consumer side too, with shoppers able to scan QR codes on products, allowing them to read product information on provenance and process.

Carrefour has credited the technology with increasing consumer trust in the brand, resulting in an increase in sales. It’s an example that many other retailers may look to follow soon.

Supplier ‘Passports’

IBM very recently announced a new blockchain network, ‘Trust Your Supplier’. The network, not solely limited to the food supply chain, has been designed to improve supplier qualification by creating a form of passport for suppliers. This will help to reduce time and resources for validation, with everything verified by third parties, such as Dun & Bradstreet, to square the circle.

The network, and network of networks, look set to revolutionise how organisations and consumers look at supply chains. The food supply chain is merely the first where the technology is making strides, though the fashion industry has also made moves to implement with significant success.

As consumers buy less fresh produce to reduce food waste, they are willing to spend a bit more to ensure quality. With blockchain, organisations can shine a light on the provenance of their goods, but also earn the trust of consumers by proving the safety and traceability of the goods. And in a fast-paced environment, those organisations who don’t engage with blockchain face the reality of being left behind.

We might never know why the chicken crossed the road. But with blockchain tracking the supply chain, we’ll be able to understand where it came from, how far away and track it’s route all the way to your plate (sorry Colin!).

Blockchain: Supply Chain’s 21st Century Truthsayer

From farm to plate, the food supply chain can now be tracked in an open, transparent, fully traceable and entirely digital way. We may never know the why, but the how and where are within our grasp!

In our latest webinar, Blockchain: Supply Chain’s 21st Century Truthsayer, we’ll be exploring the full applicability of this great technological innovation, understanding how Walmart and Carrefour have turned this to their advantage and revealing why it’s a must have for supply chains of the future! Click here to sign up now.

How Procurement Professionals Can Look Like Rockstars

Will procurement ever achieve ‘rockstar’ status within an organisation? It’s an idea that hasn’t gained much traction in the past. But help may be at hand from a new source.

Muhammad suryanto/ Shutterstock

Despite the profession’s best efforts, the terms ‘procurement’ and ‘rockstar’ are uneasy bedfellows in a sentence. When you picture a rockstar – Keith Richards, Dave Grohl, Joan Jett, Pete Townshend – they are a free spirit; perhaps anarchic, but certainly someone who lives life by their own rules. Does this sound like procurement to you? No, me neither.

Even now, after all the efforts to make procurement a strategic partner, moving from transactional purchasing to strategic buying or strategic sourcing, the image of procurement remains the same. A profession that’s very traditional, process driven, compliant (not that this is a bad thing) and just maybe a little … boring.

Although some progress has been made, rockstar status is still a ways away. While there are huge, global names that have come from the profession, the name recognition is still an issue. You know Sheryl Sandberg, Bill Gates and Tim Cook, but do you know who their CPOs are?

Have you heard of Bo Andersson, formerly GM’s ‘Mr Purchasing’? How about Jennifer Moceri, CPO of global drinks giant, Diageo? Without wider recognition of what these rockstars have achieved, very few people outside the profession will be able to understand much about what procurement can deliver.

Collective rather than Individual?

The profession has spent so long trying to create ‘rockstar’ CPOs and leaders with global profiles that it may have lost sight of the true aim – to elevate procurement as a whole. When it comes to being a ‘rockstar’, the one thing that nearly all the greats have in common is a group by their side or backing them up. And it’s in this power of the collective that procurement’s ultimate success may lie.

For the collective profession it’s about understanding what the business needs, aligning a procurement strategy with the overall business strategy, and then delivering on this. Procurement will be treated as a strategic partner when it has earned the organization’s trust as a value-adding operation.

It might be an unpopular move, but the first thing that’s going to be on the agenda is savings. The drive in procurement has been to promote an agenda that covers more than just savings – efficiency, compliance, risk management and supplier development are just a few.

However, without even realizing it, the majority of these elements underpin savings and cost reduction. The trick is to not get too focused on savings to the detriment of the wider strategic agenda. Supplier consolidation and centralized procurement are a couple of approaches which tick both the savings box and that of the wider strategic aim of adding value.

Procurement Solutions – Your Backing Vocals

Rather stretching the metaphor of the rockstar and the band, it’s important to understand the tools available to help create your own procurement version of the Traveling Wilburys. Rockstar status won’t happen in isolation and that’s where procurement solutions and procurement consulting can take to the stage.

The best procurement solutions can help turn your data into a major strength through the power of spend analytics. Software can help organizations understand who they are spending their money with, how much they are spending and, most importantly, if they are getting what they have paid for. It makes spend visible, facilitating a greater understanding of how cost optimization and spend management will work within the wider procurement strategy.

As with any band, it’s important to pick a software solution that acts in harmony with existing systems, processes and how it will work once it’s been implemented. Given that employees are the ones who will be using it on a day-to-day basis, it’s critical that the solution is user-friendly, and that employees are trained fully.

Even the great rock bands (Queen, Black Sabbath, the Beatles) sometimes need to bring in external experts to push them on to greater things. For procurement it’s no different and the choice may be to engage procurement consulting organizations to assist.

These consultants can assist with software choices, implementation and running. But Group Purchasing Organizations (GPOs) go one step further, offering contract monitoring, spend management and collective buying power through their membership network.

This can help drive savings targets, aid supplier consolidation and all the other positives that organizations want from their procurement teams. Put simply, they help transform procurement from an undiscovered and unappreciated talent to a global rockstar!

Visit UNA to learn more about the benefits of Group Purchasing Organizations.

Delivery Failure Notification: Your Spend Analysis Tools Could Not Deliver On Their Promise Of Good Data

When spend analysis solutions have failed to solve the problem they were designed to fix, they leave their users wanting more. But there are always ways to salvage your investment….

At a high level, companies utilising spend analysis solutions are leveraging spend data for the purpose of gaining visibility into cost reduction, performance improvement, supply risk, compliance, and other value generation opportunities. Simply put, spend analysis, and the resulting spend visibility, are considered “table stakes” for any procurement organisation. No procurement function can make a claim to world-class status or even average performance if it lacks this entry-level capability. It should be the first and last step of the strategic sourcing process that both identifies the opportunity and measures the organisation’s achievement thereof.

While these solutions have existed for decades, many companies that utilise them continue to suffer from poor procurement data, if not downright unusable data. They are undone by noncompliance, data entry errors, fragmentation of data across multiple systems and general poor data discipline.

Many of these solutions encompass complex organisational schemas such as UNSPSC, which was designed for other purposes and applies a categorisation structure that reflects the way supply markets are organised. Furthermore, general ledger (GL) codes are simply not a trustworthy substitute for a true procurement and sourcing taxonomy, and were designed for people who write the checks.

Certainly some companies must have great procurement data, because so much money has been spent on these systems specially intended to solve this challenge. But in cases where those technologies fail to deliver on the promise of good data, they are typically suffering from a host of data issues due to:

  1. Accounting-oriented data not aligned with procurement categorisation
  1. Maverick and unmanaged spend not captured in the solution
  1. Poor input discipline, or procurement-related data being entered by non-procurement resources

When these solutions have failed to solve the problem they were designed to fix, they leave their users wanting more. User adoption is low and many find that additional data manipulation is required, with many organisations dedicating internal resources to spend analytics, despite paying at third party to perform this for them. These tools are often clunky and difficult to use and fail to deliver the key insights procurement professionals need to drive value and impact the bottom line.

The market is calling for an end to this systemic problem impacting most procurement functions. After all, having access to quality data will always ensure procurement a seat at the table. Organisations should be able to rely on solution providers to provide them at a minimum with:

  • Highly accurate categorisation
  • Actionable, data-driven, procurement-focused insights
  • Fingertip access to ‘good” or even “great” data through a simple, easy to use interface

If you find you are not experiencing this with your solution provider, there are still ways to salvage your investment. Identify the desired changes and develop strategies with your vendor to overcome the visibility challenges. They should be ready and willing to restructure the underlying data/taxonomy to ensure you reap the benefits of the solution you implemented. Today, procurement professionals should be focusing on the strategic aspect of their roles and elevate beyond the frustrating and tactical world of data manipulation.

Continue reading Delivery Failure Notification: Your Spend Analysis Tools Could Not Deliver On Their Promise Of Good Data

6 Things To Consider Before You Buy Any Procurement Technology

Thinking of investing in some of the latest procurement technology? If you haven’t consulted market trends, got a third opinion and done all of your research, you might want to pull on the reins!

Buying procurement technology these days is a complicated business.

With ever more niche vendors entering the market and established providers offering increasingly sophisticated solutions, differentiating on face value alone can be as clear as mud. However, given that your decision will have an enterprise-wide impact, it’s crucial that you assess your options and make the most informed decision possible.

1. Separating Fact from Fiction

Of course, you will have the product marketing collateral from each provider such as datasheets and solution overviews.

However, you need to be aware of how much is marketing ‘fluff’ and how much is an accurate reflection of the solution’s capabilities.

To do this, you can turn to customer case studies and testimonials to understand what their experience of implementing and using the solution has been like. But remember, even that source of information comes with its own challenges and shortcomings. If the case study focuses on the customer’s functional use of the product, it may not offer you an accurate view of customer service levels or product performance, which are of course key considerations in making your decision.

This is where third party research and validation comes into play.

2. Look at market trends

Where do you go and how do you choose your sources of information?

The entire technology market is well served with analysts reporting trends, competencies and guidance on the good, the bad and the ugly of the industry. In searching for technology vendors that meet your requirements, this certainly helps sort the “wheat from the chaff”.

That said, the technology market is quite unique in that it experiences a rapid advance in product capabilities. With competition driving innovation, product sets evolve quickly and when you’re looking at R&D in technology sphere, one year is a long time. This means that its essential to ensure that the information you’re using, and basing your decision upon is up-to-date and reflective of the latest capabilities within the market.

3. Consult The Magic Quadrant

One of the world’s largest, most respected analyst organisations for technology research is Gartner. Each year or so, they produce the Magic Quadrant which is a culmination of research in a specific market, giving individuals a broad view of the relative positions of the market’s competitors. The Gartner Magic Quadrant research provides a graphical competitive positioning of four types of technology providers in fast-growing markets; Leaders, Visionaries, Niche Players and Challengers.

They produce this research for a range of technology sectors, including procurement sourcing applications, and it is a well-trusted source of information for assessing your options when you go to market.

Access the Latest Gartner Magic Quadrant for Strategic Sourcing Application Suites.

4. Make sure you’re using up-to-date analysis

Given the considerations around the pace of advancements in the eProcurement sector,  it is all the more important to ensure that you’re using the most current information available. In addition, because of the time between each report release, you’ll find that vendors that have been in a Leaders quadrant can fall from grace into lower quadrants/waves.

This is because to remain in the Leader segment is dependent on a vendor’s investment in product functionality and features, as well as their business vision to meet the needs and demands of the procurement marketplace. Customer satisfaction and referencing is also taken into consideration for the research, meaning a strong Leader position is indicative of a satisfied customer base.

5. Get a third (Party) opinion

There are a number of consulting and analyst organisations who conduct independent research of the technology space in order to provide a clearer, qualitative segmentation of the marketplace. By supplementing the information supplied by providers with this third party research, you can validate performance and delivery to build a more objective view of the market place. To get you started, here is a short list of publishers that you can turn to for information:

  • Spend Matters Network
    This leading network of procurement websites is a great source of current procurement insight. Their commentary and reporting examines the latest news, techniques, “secret” tools of the trade, technology, and its impact. Most of the content is free to access, but there is a Spend Matters Pro membership that will give you access to exclusive research and content.
  • Procurement Leaders Network
    Procurement Leaders™ is a global membership network, serving senior procurement and supply chain executives from major worldwide corporations, providing independent procurement intelligence, professional development and peer-to-peer networking. It has a broad range of research into various sectors, but you do need to be a member to access most of the content.
  • Supply Management
    Supply Management is the official publication of the Chartered Institute of Procurement & Supply and features the latest news, view and analysis for procurement and supply chain professionals worldwide. The website provides daily news and opinion and exclusive content, in addition to access to more than 15,000 articles.

6. Do your research

As the marketplace for procurement software and technology continues to grow, it can become a confusing place for those looking to choose a solution; you’ve niche providers who offer specific pieces of software and more established leaders offering integrated full-suite solutions. Each promises to deliver the most effective, powerful solution but how much of that is bluster and how much is grounded in truth? By all means utilise the product marketing information that a vendor provides, but scrutinise it too. Is what they say true?

Ensuring you conduct thorough third-party research and refer to existing customer testimonials is key to finding the answer to that question and key to you selecting the best solution for your organisation.

This article was written by Dan Quinn, SVP Jaggaer MENA.


Join JAGGAER In Munich next month for REV 2018 – two action-packed days, filled with the latest in eProcurement innovations, trends, and strategies designed to help you accelerate your spend management digital transformation.

Hear how your peers are leveraging highly engineered technology to deliver strategic procurement value to their organisations.

Spaces are limited so secure your place today and check out the incredible speaker line-up.

The Jaggaer Juggernaught Rolls On

With the recent acquisition of BravoSolution, Jaggaer continues its trajectory of rapid, aggressive growth to contend for the title of the world’s largest spend management solutions company. 

The Jaggaer growth story has been interesting to watch. Formerly known as SciQuest, the company’s announcement about BravoSolution needs to be understood in a long line of acquisitions beginning in 2011:

  • January 2011: AECsoft (supplier management and sourcing technology)
  • August 2012: Upside Software (contract lifecycle management (CLM) solutions
  • October 2012: Spend Radar (spend analysis software)
  • September 2013: CombineNet (advanced sourcing software)
  • June 2017: POOL4TOOL (to add direct material capability and introduce Jaggaer Direct)
  • December 2017: Italmobiliare’s BravoSolution.

The company’s press release says the acquisition will effectively render Jaggaer the “largest independent, vertically focused spend management solutions company in the world”. The solution includes advanced spend analytics, complex sourcing, supplier management, contract lifecycle management, savings tracking, and intelligent workflow capabilities.

As a result, Jaggaer will have over 1,850 customers connected to a network of 3.7 million suppliers in 70 countries, served by offices located in North America, Latin America, throughout Europe, the United Kingdom, Australia, Asia, and the Middle East.

Spend Matters reports that this latest move will make Jaggaer “the No. 2 player to SAPAriba in the procurement technology market by revenue”.

A Spend Management “Super Suite”

Robert Bonavito, CEO of Jaggaer, says that the move “creates a powerhouse in the global spend management space and represents the execution of our strategy to build a Super Suite of fully integrated spend management solutions. This acquisition enables the largest companies in the world to do business with a single partner and cover all of their spend management needs. We have best of breed, fully developed solutions for multiple vertical industries delivering value across the full spectrum of spend types. With our size, financial stability, and expanded infrastructure we can further accelerate product innovation and bring customer value across a vast swath of geographies and industries.”

The CEO of BravoSolution, Jim Wetekamp, commented that Jaggaer is “a bold company on an aggressive growth path. The combined entity will deliver greater opportunities for both customers and employees. The combination will allow increased innovation and provide a foundation for procurement digitalisation that will set the trends and benchmarks for the entire industry”.

What’s next? 

The language used in the press announcement (“covering all spend management needs” and “full spectrum of spend types”) appears to suggest that with the acquisition of Bravo, Jaggaer’s offering is now complete. But is this the peak of Jaggaer’s rapid growth story? As the dust settles and any remaining gaps begin to emerge, users may get a glimpse of the type of solution Jaggaer intends to acquire next.

Does Insurance Against Failure Really Keep You Covered?

Is it really worth taking out insurance against system failure? Is the true value in a system that works first time, all the time?

Download ‘Parting the Clouds‘, Smart by GEP’s latest whitepaper, to understand the difference between Cloud Solutions and SaaS Software.

There was a debate in the office that ran for a while when we were putting together the white paper that’s associated with this post.

“Yes,” said one camp, “we understand that there are technical, operational and architectural differences between Cloud and SaaS, but so what?”

In other words, why should Procurement care how their software “solution” is delivered to them, as long as it works?

“Fair point” said the others, “but if we believe the cloud model is inherently more secure, robust and future-proofed than the other, should we not call out that distinction?”

“Again,” came the response “if a SaaS implementation is backed by the necessary service level agreements from the supplier, what’s the difference?”

And that is when the subject of insuring space launches came up.

Bear with me.

Can Insurance Really Cover Everything?

Insurance is what we’re talking about, of course. Ensuring your Procurement operation can carry out the business at hand without interruption or disruption is a primary goal of selecting the right software system. The SLAs in the contract with the vendor are what comprise that insurance policy.

As is the case with everything in the insurance world, the greater the degree of protection you want, the higher the premiums.  But there is also a matter of the risk.

Seven per cent of satellites and spacecraft fail at launch. Recently some fairly dramatic launch failures have made the news. The ones that really make the headlines are those that involve the destruction of a payload that teams of scientists have been working on for years.

You can almost feel the despair and horror of watching a decade’s hard work destroyed in mere seconds.

Usually, but not always, these payloads are insured against multiple possible eventualities. Launch failure, failure on deployment, failure on landing – as in the case of the recent ESA Mars mission. Naturally the premiums are immense to insure an interplanetary mission. Often the insurance by no means covers the ultimate cost of the failure.

The many millions paid out after a launch failure may cover some of the financial stake invested by the agencies funding the project. However, there is essentially nothing that can recover the loss of the science that was to be delivered. The physical and material can be replaced, but the loss of the results is absolute.

Don’t Insure Against Failure – Do It Right First Time!

A far better form of insurance for space launches is a system that doesn’t go wrong. This is in fact the calculated risk taken in many projects. Catastrophic failure cannot be mitigated with cash, so better to spend the insurance premiums on building something that won’t explode.

And this is why it seemed an appropriate metaphor for the kind of SLA insurance under discussion. It’s all very well having the on-paper insurance for failure coverage, but that’s of little consequence if the financial value of the pay-out can do nothing to mitigate the real cost.

This is why, then, we feel there is a clear distinction between different interpretations of what “cloud” actually means. The fundamental underlying scalability, security, robustness and other forms of risk really should be considered when making a genuinely informed decision.

Comparing vendor contracts like for like you may see the same SLAs – system availability, uptime and access. But without a doubt the benefit of an SLA is in never having to rely on it.

If your procurement technology fails, are you really covered against all the potential losses? What risks should you be considering when adopting new Cloud technology?

Download Smart by GEP‘s latest whitepaper, ‘Parting the Clouds to find out all you need to know.

The Efficiency Value of a Marketplace Approach

Procurement talks a good game when it comes to efficiency. However, few are walking the walking when it comes to taking real action.

This is the second in a three-part series of posts. If you missed my first, ‘Instant Access to Supplier Information a Step Change for Procurement Productivity’, click here to read it.

In that post, I presented a challenge to anyone who assumes that having technology guarantees progress. Make sure your technology is earning its keep and not just putting your inefficient, manual methods online.

In this post, I’m going to take the same approach to efficiency.

What is Real Efficiency?

We talk a lot about efficiency in procurement, but we take very few steps to actually improve it. Real efficiency is more than doing more with less. It is also about timing. Sometimes, doing the same task at a different time increases the impact potential of the effort behind that task.

Take risk management or risk mitigation as an example. Addressing risk should be an active part of the sourcing process, not something to be managed afterwards. While risk information is readily available, sometimes what procurement really needs to know what their peers think of a supplier.

That is why tealbook combined internal supplier knowledge, data from Dun & Bradstreet, and aggregate intelligence from your industry peers into each supplier profile. Adding a peer view to the supplier discovery process not only makes it more robust, it significantly increases the trust factor for everything procurement learns.

Addressing risk early is critical. Two of the first opportunities procurement gets to mitigate risk arise during the supplier discovery process:

1. Inviting more qualified suppliers to participate in the sourcing process improves the final award decision.

You’re always going to lose some suppliers to disqualification or elimination. Investing in the discovery process up front decreases the fall-off rate, and ideally presents the team with a larger number of more qualified suppliers to negotiate with and consider for contracts.

2. Looking at supplier-related risk factors before the sourcing process begins makes it possible for procurement to push back on requirements if they are too confining.

Procurement tries to be good about collecting risk information in RFx’s, but many times it is too late to change the direction of a project based on what the team learns from suppliers.

By doing an early assessment of the available pool of suppliers and their relative risk before going to market, procurement creates an opportunity to widen the pool of prospective suppliers.

Making Efficiency Proactive

In addition to thinking about the timing of tasks and what impact that has on efficiency, procurement needs to look for opportunities to combine activities.

If you are going to conduct a supplier discovery exercise anyway, why not search a platform that incorporates third party risk data in addition to supplier information and buyer knowledge? tealbook incorporates D&B information into supplier profiles so procurement see which suppliers offer the product or service they are looking for in one place.

Taking efficiency to a more proactive level, why not pre-vet hundreds (or thousands!) of suppliers across a wide range of categories? With the right technology and information, procurement could, in essence, create a custom virtual marketplace of suppliers that are ready to bid at any given time.

A broad approach drives efficiency because the suppliers are already vetted and risk is moved up in the process without adding a step or a delay. This is an ideal application of technology because it enables something procurement can’t do on their own on the same scale.

Value creation goals notwithstanding, good procurement teams want competition as well. Without the supplier discovery pre-work being done, procurement is stuck with the same old suppliers time and time again.

And there is nothing efficient or strategic about that. Marketplaces are certainly not a new idea, but they are a path to efficiency that we should look for ways to improve.

Now that I’ve shared my point of view on scalable technology and marketplace efficiency, I’m going to wrap this series of posts with an optimistic view of procurement’s forward looking potential.

Gregg Brandyberry is a recognised pioneer in procurement and sourcing technology. He has over 40 years experience in industries such as automotive, textile, manufactured goods, electronics and healthcare.
He is the former Vice President of Procurement – Global Systems and Operations for GlaxoSmithKline, and a Senior Advisor for A.T. Kearney’s Procurement and Analytic Solutions organisation.