Tag Archives: procurement solutions

Resistance is Futile…Or is it?

Is resistance to automation of procurement processes futile? Or are we missing the benefits that automation will ultimately bring to the profession?

AI Resistance

You can download the latest GEP white paper on the drive to an automated world, and why resistance is unnecessary, here.

The cannon of science fiction is full of tales of the battle between liberty, exemplified by human free will (including the freedom to screw everything up royally) and tyranny, portrayed as submission to an overwhelming force.

In many cases the “assimilation into the collective” or whatever, is not an unconditionally negative prospect. The promise of an end to suffering and provision of all human needs is often conveyed as the ‘upside’ of the deal to subjugate humanity to forces beyond our understanding.

Automation – The Dark Side?

From Childhood’s End to The Matrix, there’s a definite cost-benefit analysis to be carried out by the protagonists during their struggles to overcome the supposedly overwhelming power of the dark side of the story.

In fact, in the latter, the movie’s clichéd traitor – they even named the character “Cypher” – sells out the heroes on the promise of a return to the simulated ‘real’ world with the words, “Ignorance is bliss.”  And when asked by the agent of evil, “Then we have a deal?”, he replies, “I don’t wanna remember nothing.  Nothing! You understand?”

There is even a branch of anthropic philosophy than contends that our reality is likely to be a simulation run by an advanced post-human intelligence. As coherent and convincing as some of that reasoning appears to be, the fact remains that there is no possible way this hypothesis can be proved or disproved.

Like all matters of faith, this notion is utterly irrelevant when we attempt to construct a set of rules that will let us predict what will happen in (what certainly appears to be) the real world.

Rise of the Machines?

Recently it has been suggested at some of the procurement industry’s leading conferences that business is beginning to enter a phase that will be dominated by artificial intelligence and robotic process automation, and lead to the eventual replacement of the humans in the process.

Dissenting voices are heard to cry “nonsense,” or more colloquial versions of the same, but the arguments are nonetheless compelling. Only this time, they have a certain amount of evidence to back them up.

It is true. The technology exists today, in varying states of maturity, which – if synthesised into a single entity – could effectively do away with human involvement in the supply chain. From AI-run decision making, to automated manufacture and delivery, to fuzzy logic-based distribution of spend across a supply base, the characteristics of today’s procurement activity could, quite readily, be encoded and turned over to a software overlord.

Other sci-fi classics, the likes of the movie ‘Logan’s Run’, and the book ‘The Caves of Steel’, deal with the machine-run production of goods and services in equal measure to the imposing of external force on human freedom. And as life imitates art, there will naturally be greater degrees of this emerging.  Today’s 3D printer is surely tomorrow’s Star Trek Replicator.

The End for Procurement?

But, whatever the generations of the future will accept as everyday technology, the idea that we’re approaching a defining moment, beyond which procurement professionals will be irrelevant, must be viewed with a good degree of scepticism.

There’s no doubt automation works really, really well when it comes to replacing easily mapped and understood processes, from assembling a car from a standard kit of parts, to processing a contract-compliant purchase order through to invoice payment.

But the simple fact is we just don’t understand enough about the world, human behaviour, the markets, the climate, indeed any part of the future, to be able to encapsulate all our business rules into a single algorithm that the machine can follow to manage supply and demand for the rest of time.

The landscape in which our largest corporations operate is truly chaotic, in a mathematical sense, and deriving a simple set of rules to automate demand and supply across such organisations is, I think, beyond us today.

One of the very drivers of modern prosperity is the ability to “make a buck” and any kind of completely automated process necessarily eliminates margin at source. Negotiation between buyer and supplier AIs will not only be mind-bogglingly rapid, but likely to end in stalemate – and the same stalemate as the last time.

If we lose negotiation, then it seems to me that we will lose innovation, motivation and the result will be stagnation.

Resistance is Unnecessary

The future will be radically different to the present.  It always has been and always will be, and all predictions as to what it will look like are inevitably wrong. Including this one.

But with that uncertainty comes opportunity. Automation in procurement will certainly be a big thing in the future, but it will be complex, it will be messy and it will need human brains to make it work, and not just to write the code.

The human brains that work in procurement today are those that will guide the whole world of supply forward into a brave new world. Reports of procurement’s demise have been overstated, naturally, but we can still take control and make the machines work for us.

Resistance isn’t futile. It’s unnecessary.

GEP Banner

Automation doesn’t mean the end for procurement, and the benefits of automating processes vastly outweigh the drawbacks, say GEP. For more on this, download the latest white paper research.

For more information on high-performing procurement software, visit the Smart by GEP website.

Are Procurement Professionals Stuck in the Stone Age? – Part IV

As B2B technology companies are beginning to realise the benefits of being easy to use, what changes do we think will happen? How do we envisage the B2B tech space evolving within the next 5-10 years?

B2B Software

Market Dojo put an article together examining what it would look like in 10 years time, and how it will have to adapt and change to remain ahead of the game.

With a focus on Market Dojo as an eSourcing company, we came up with a few conclusions, most of which can be applied not only to eSourcing, but to B2B technology companies as a whole.

The table below looks at different functions of technology and predictions on how they might change within the B2B landscape.

Function Change
Mobile Technology Whilst consumers are ever increasing their use of mobile tech, are businesses going to become more reliant on this in the workplace? The simple answer is yes. B2B companies need to be aware of becoming even more responsive, searchable and usable across the mobile technology of the future?
Google (power of the web/search) Will this develop enough and become intelligent enough to make other applications obsolete? Such as developing  more intelligent supplier search function and becoming the de-facto supplier database though their categorisation.
APIs The ability to integrate between solutions is already possible, but in the future it is set to become even more simple. We expect it becoming ever easier to integrate with any (software) component through standard connectors, so that best of breed becomes as attractive or even better than ERP solutions.
Amazon/Google/Apple B2B platform Established companies moving into other areas (E.g. developing eMarketplaces) and threatening the smaller providers with their ability to quickly develop technology. This is already happening.

Procserve, for example, have built links with Amazon for B2B purchasing. (See full article here.)

Eradicating the user interface Moving from slick user interface to ‘no user interface’, as per this Coupa article.

A rather controversial idea, but we can see some logic that instead of having to log into a tool every day, instead it fits around your life so you can interact with it outside the tool via Voice Activation such as Google Voice, Siri, Cortana, etc.

True commoditisation The final stage of the technology lifecycle is commoditisation. (See Market Dojo’s video on the four stages of technological growth taken from a TED lecture.)
Integrated market information How global news stories affect various aspects of your business and what technology can do to make companies more aware and faster.
Also how tech can keep companies updated with what’s being said about their brand. (Ref. Owler.)
More focus on AI & Automation/robotics The software could take actions when it ‘thinks’ it is needed. e.g. within eSourcing – delay an auction due to lack of liquidity, or suggest a better lot structure based on the bids received.
Public Sector Procurement A big shake-up in the public sector software market to disrupt the legacy tools with their complex workflows and procedures to be a slick tool that people enjoy using. E.g. Matrix SCM
IT involvement & Security barriers IT’s function is changing from an in-house design/build/implement function to a strategic business partner who guide business stakeholders in the selection of appropriate SaaS systems.
Marketing How will people find us in the future, compared to how they find us now?
How will the power of search change in the future?
At the minute, the focus is on Content Marketing, but what next?
More personalised, more interactive marketing?

As you can see, we expect the Market Dojo platform to become more intuitive and user-friendly over the next few years. Is this true of all business softwares? Will we (realistically) be able to prioritise usability and design over functionality and features?

The authors have pondered long and hard the question of when the B2C approach will catch on in the B2B World. We think it is progressively changing, but will, for the reasons listed in previous articles, take some time to change.

New suppliers with easy to use solutions are coming to the fore, Coupa and Egencia come to mind. But we postulate that it will be a slow change process, with perhaps another 5 years before the whole B2B solution market feels like today’s B2C environment – at which point the B2C landscape will possibly be different again!

To stay at the forefront of technology, can B2B companies look to B2C arena as a gauge of what’s to come?

What are your thoughts?

Market Dojo and Odesma have partnered to combine their intuitive eSourcing software and expertise in offering business advisory services to offer clients a winning procurement solution.

Silo Busting: Using savings management to drive collaboration

In a perfect world, savings management should follow a clear pattern: set targets, identify then prioritise initiatives, track initiatives and, finally, review the targets. However, managers know that in reality, these five steps are beset with difficulty. They have to deal with unknown targets and goals, manual inputting, approval difficulties, siloed projects, sporadic monitoring and, worst of all, focus on the wrong projects.

How to bust silos when nothing seems to work

Many of the woes besetting procurement professionals can be traced back to organisational silos, which hamper effective communication, hinder compliance, and impede transparency. You’ve tried everything to improve collaboration – from issuing company-wide news bulletins, increasing the number and frequency of interdepartmental meetings, and even drastically altering the seating arrangements … but sometimes, silo-type behaviour is just ingrained. No doubt, you have wished there was some sort of silver bullet that will do away with silos once and for all.

According to SciQuest’s Karen Sage, there is. Sage is excited about launching a new solution that will bring everyone on board with procurement savings initiatives. “Our new Portfolio Savings Manager (PSM) is really going to hit those organisational silos hard”, says Sage. “It encourages interaction, creating cross-collaboration within the business. You’ll have all of these different silos working together on your procurement savings initiatives, and those frustrating savings management difficulties have been ironed out into a seamless and efficient process.”

SciQuest has been in the spend management space for a long time – 20 years, in fact – and services a wide range of industries and organisations including many of the Global Fortune 500. Customers using SciQuest’s Source-to-Settle Suite wanted a way to track projects in a single interface that incorporates multiple aspects of the procurement process, whether it be savings tracking, project management or workflow management. The company responded with the creation of the innovative PSM, which can be used as a stand-alone product, but its full functionality is revealed when integrated with the existing Source-to-Settle Suite.

The cross-functionality of PSM enables team members in any department, from sourcing and procurement to finance and operations, to:

  • identify potential savings and process optimisation projects
  • approve and prioritise initiatives
  • assign tasks and allocate resources
  • track milestones and results, and
  • monitor progress against forecast and budget.

The system is a project-manager’s dream, automatically determining milestones and tasks required to complete initiatives and allocate resources. PSM replaces tedious manual processes such as spreadsheet inputting, project tracking and database updating. It captures strategies and savings initiatives from inception to realisation, forecasting, scheduling, tracking and reporting savings. Users benefit from historical project and savings visibility, without having to dig into the database or spreadsheets for lost information.

Savings management made simple in five steps

 PSM users follow an intuitive five-step process, with a focus on simplicity throughout:

1. Identification

Users are guided through the completion of a savings initiative creation with the aid of a left-side navigation section that indicates counts and completeness.

  1. Authorisation

Approval workflows are applied to the initiative based on business compliance requirements.

  1. Prioritisation

The user assigns a priority to each initiative on a scale of 1 to 10. Priorities can be adjusted to reflect current business and resource parameters.

  1. Execution

Deliverables and tasks assignees can update their tasks status, mark them in-progress, complete or reset the due date.

  1. Achievement

Reports and graphs are automatically generated and displayed on customised dashboards.

Having the right system in place enables procurement professionals to stop spending valuable time trying to persuade unwilling cross-departmental colleagues to collaborate. Concentrate instead on getting everyone interacting with your new system, see the silos melt away, and watch the savings flow.

SciQuest’s Portfolio Savings Manager will be available for purchase in July 2016. For more information, please visit www.SciQuest.com.

Coupa R15 – delivering agility and measurable value

David Hearn, former CPO Indirect Procurement at Kaiser Permanente, Sun Microsystems and Juniper Networks, talks to Procurious about how Coupa’s latest product releases (Coupa R15) deliver more value to businesses.

Coupa R15 InvoiceSmash

One of the benefits of being a leader in cloud-based spend management solutions is that you can push innovative enhancements to customers rapidly and efficiently. Coupa does so three times per year, with each release being something of an event as customers eagerly await the latest improvements to the platform.

We’re talking with Indirect Procurement guru David Hearn about which of the more than 45 new features he’s most excited about in Coupa Release 15.

Hyperlocalised Languages and Suggest-A-Translation™ (Patent Pending)

People access Coupa in over 100 countries and more than 20 different languages. Coupa has recognised that their customers have unique language requirements, and also that every organisation has a business language of its own. Hyperlocalised Languages allows customers to modify any of Coupa’s 20+ languages for their own purposes, with changes limited to their organisation only and not impacting other customers. Coupa also added Suggest-A-Translation to collect end-user translation suggestions and route to the customer administrator for real-time updates. This personalises the cloud platform in ways never before seen in this industry and is a key reason for the patent pending status.

David says: “The hyperlocalised language feature helps all users of the platform feel included in the management of the tool which is a huge benefit to getting 100% adoption. Language is important, and if an employee in Japan (for example) thinks that an on-screen word doesn’t fit their organisation’s business vocabulary, they can simply suggest a change to better suit their local business needs.”

Unified Platform Innovations and Enhanced Analytics:

Coupa has updated its sourcing recommendations engine to add real-time monitoring expenses, along with a new supplier risk recommendations engine, an inventory trends dashboard and enhanced embedded analytics functionality that adds more visibility and control. The platform embraces ‘suite synergy’, which means applications are fully unified, and the user experience improves with the use of multiple applications.

David says: “I can’t stress enough the importance of having everything seamless on one platform. Having the Coupa platform provide recommendations across all the ways an employee spends money is a game changer. The entire end-to-end process is electronically sharing data and pro-actively prompting procurement teams with new ideas for better sourcing. This enables those teams to focus on being strategic – and that’s a huge value. These latest updates help companies be more agile and make decisions faster”.

Contract Collaboration

Contract Collaboration is a new Coupa application that brings real-time authoring to contracts and extends Coupa Contract Lifecycle Management. It removes the need to use Microsoft Word for redlining documents passed around via email. The new application provides automatic versioning, captures key terms and conditions and transfers them electronically into the ordering system.

David says: “For as long as I’ve been a CPO, we’ve struggled with the entire lifecycle management of contracts. This latest application from Coupa captures the upfront authoring collaboration and links it to the actual transaction – no one has done this before in a unified suite that captures all spending from expenses, to invoices, to requisitions. There’s no longer a need to manually input the contracts terms and conditions into the system; it auto-fills the whole process. It frees up time to focus on better sourcing instead of clerical duties. It also reduces the risk of contract errors.”

Check out Coupa’s great video on Contract Collaboration (watch for the procurement professional smashing up his keyboard in frustration at Microsoft Word). 

InvoiceSmash

While we’re talking about smashing things, Coupa InvoiceSmash enables suppliers to automatically parse emailed PDF invoices so details are auto-filled into Coupa. One of the most exciting aspects of this product is its machine learning, which ensures the same mistake won’t be made twice and minimises the need for human intervention. The application is currently available in an early access program.

David says: “No one wants to use their limited headcount budget to fund clerical duties of manually entering data from invoices.  It’s archaic. Many have tried using OCR for invoice processing, but this is expensive and the human review and rework on invoices is extensive. InvoiceSmash automates this mundane data entry through accurate digital data extraction and means companies can remove most of their clerical team members and re-invest back into the business.”

Coupa released a clever parody video showing AP and AR professionals on the couch with a relationship counselor – their “marriage” can only be saved by InvoiceSmash.

And much more in Coupa R15:

For the full list of R15 updates, visit http://www.coupa.com/newsworthy/press-releases/release-15/

Are Procurement Professionals Stuck in the Stone Age? – Part III

If procurement technology is stuck in the stone age, what do we need to do to modernise? We take a look at some B2C examples for inspiration.

B2B & B2C

So far in this series, Market Dojo and Odesma have discussed whether procurement technology is stuck in the stone age, and why B2B software isn’t keeping up with its B2C counterparts. This article examines some B2C companies getting it right.

This article was originally published on Market Dojo.

Slowly but surely, not only do we see B2B companies adopting B2C ideologies, but some B2C companies are jumping in and filling the gap left by B2B providers. Granted, the complexity of B2B companies isn’t completely covered by the consumer oriented companies, so they are aiming more at the smaller companies. But all the same it still highlights a shift in the market.

By taking a couple of examples, we can see where these changes are happening and examples of B2C solutions doing it right.

Uber and Freight Brokering

MD - Uber

The transportation networking company Uber originally focussed on the B2C space by bringing together people looking to travel in the same direction, aggregating the demand and sharing out the cost of the journey to charge a lower price.

Targeting those traveling for personal reasons and commuters, they are paying special attention to the business sector with their latest development of business profiles.

More recently, focus has shifted to the freight industry where they hope to achieve similar by introducing mobile-based freight brokering technology. Not only will there be a reduction in number of ‘empty miles’ travelled, mobile-based freight brokering technology can help lower operating costs, improve fuel efficiency, boost asset utilisation and enhance resource productivity.

Benefits which Uber have been reaping since they formed in 2009.

Amazon Business

Amazon touch briefly on the B2B side with Amazon Business. With benefits like integration with purchasing systems and order approval workflows, they have adapted Amazon to create Amazon for business.

This could have extreme effects on the the current technology providers, should Amazon develop an eSourcing/eAuction aspect. It would not be that difficult for them to make the shift.

Another area in which Amazon has moved to a B2B focus is with their hosting options. This isn’t an adaptation of their B2C offering, but an entirely new market for them.

Software as a Service

MD - Airbnb

Airbnb, for example, provide a marketplace that allows one to search for and/or offer accommodation. Their sleek design, mobile-optimisation, carefully thought-out filters, and simple sign-in methods are something to be rivalled. Having relied heavily on investment, they have been able to afford the development costs and created a really neat SaaS product.

MD - ProcurifyProcurify is another such example of improved, B2C-esque usability. They aim to provide P2P technology without the presumed “boring” grey-scale colour scheme and clunky design that we have seen (and expected?) for so long. They have responsive design and mobile applications available. With their bright colours and simplistic design, they are very appealing.

Social Networks

But will this new technology, mainly adopted by new companies, only appeal to the millennials of today? Will previous generations appreciate this or seek their old faithful, familiar, providers.

Jive is also an interesting example. Marketed as “The Next Leap for Social Intranet Software“, their user interface is very similar to that of Facebook. Or, at least, Facebook 3 years ago.

MD - Jive

The concept is brilliant – provide companies with an internal social platform to share company news and collaborate. However the user interface still leaves something to be desired. Granted it’s one of the best on the market, and I am in no way criticising them specifically, but overall, there is still a lack of ease-of-use in B2B social platforms in comparison with B2C.

Is this because we expect it, because more complexity is required, or because the design needs to remain colourless and simple?

LinkedIn have recently redesigned their ‘groups’ making them more user-friendly and appealing, so increased usability is something which they pay attention to. But the creativity of design is definitely lacking in the B2B world. Why does business have to be so boring?!

The procurement community is lucky to benefit from the industry specific, social platform Procurious, which, with its bright colours and easy interface has a very B2C feel – which differs greatly from LinkedIn.

MD - LinkedIn and Procurious

In the picture on the left, you can see crowded text and pictures with no clear direction of what to look at next with a few small tabs at the top to interact with.

On the right the information on the profile page is broken down into tabs and the contact information on the left-hand side makes it easy to see details of an individual.

It seems that Procurious, being a more recent development, has taken learnings from other solutions (in its space) to create a more user friendly social media platform. Whilst LinkedIn (above left) is busy and cluttered, Procurious provides a more simplistic, clearer view. If you haven’t done so already, definitely recommend getting involved there and signing up to the tool.

Global Trading

MD - Alibaba

Alibaba provides an online platform for global wholesale trade. They launched in 1999 and attempt to make sourcing of goods and suppliers more simple for businesses, working with millions of suppliers across the globe.

Within the tool, they have a categorised search option for buyers with the ability to ‘get quotations’ from the approved supplier list within Alibaba (AliSource Suppliers).

So how will B2B software and technology evolve in the next decade? Make sure you read the final part of this series to see what we think.

Market Dojo and Odesma have partnered to combine their intuitive eSourcing software and expertise in offering business advisory services to offer clients a winning procurement solution.

Coupa Inspire: Rethinking the Possible with Rob Bernshteyn

Lights, music, action! Hugo Britt recounts his experience of the spectacular opening keynote at this year’s Coupa Inspire conference.

Coupa Inspire

The Faculty’s Hugo Britt recently attended Coupa Inspire ’16, a dynamic conference bringing the Coupa community together in San Francisco, California. 

Doof, doof, doof, doof.

I’m sitting in the Grand Ballroom of San Francisco’s stunning Westin St Francis hotel and the place is packed. The Coupa Inspire ’16 conference is just about to be launched, and all the seats are taken. People are lining the walls and spilling into an adjoining hall, complete with a big screen set up to cope with the numbers.

Outside the hotel lies San Francisco’s famous Union Square, most of which is taken up by an enormous pavilion bearing the Coupa Inspire logo. This is where the exhibiters spruik their products, and also where the 2000 or so delegates gather for breakfasts, lunches and networking.

The tent itself is generating a lot of interest among the locals – I was stopped by onlookers on more than one occasion, who asked me what the tent was for and what was going on in there. You could even hear the word “Coupa” shouted by tour guides from the top decks of the red buses regularly cruising past the square.

In the tent it’s dark, with spotlights flashing around the room, and the music is turned up LOUD. I can feel my ribcage vibrating: doof, doof, doof, doof. The guy at the sound desk receives a cue and, unbelievably, doubles the volume. Into this buzzing, clubby atmosphere, walks Coupa CEO Rob Bernshteyn, and the crowd roars.

Cultural Buzz

Coupa has to be applauded for the vibrant culture it has created. The 600-strong Coupa team’s enthusiasm is infectious, and the marketing is superb, giving the whole conference the atmosphere of a celebration. This celebratory buzz can be felt in the brilliant ‘Freedom‘ video, featuring the team lip syncing and dancing around their head office and Union Square.

Bernshteyn stresses that Coupa isn’t a technology company. Rather, it’s a “value as a service” organisation. Simply put, it’s about discovering, realising and optimising the value for its customers.

The numbers are impressive. Coupa has been adopted by hundreds of businesses globally, representing millions of users, and over two million suppliers on its open business network. Together, Coupa users conduct tens of millions of transactions per year, with approximately $200 billion in spend under management.

Building on Data

All of this activity on the system generates a vast amount of data, and the developers at Coupa take full advantage of its potential. “Think about what can happen”, says Bernshteyn, “when we combine the insights around the billions of dollars running through our system”. Customers have access to real-time benchmarking that shows how you are tracking against the entire Coupa community.

Bernshteyn also takes the opportunity to launch Perfect-Fit Benchmarks, which enable users to understand savings, invoice cycle time and more by industry and by category. This vertical application means the AI can predict the right time to buy specific products and services based on historical data.

Bernshteyn circles back to Coupa’s catch-cry: rethinking the possible through measurable value creation.

The software’s popularity comes down to the platform’s simplicity, efficiency and ease-of-use, designed to gain maximum visibility of what you’re buying and who you’re buying it from. The phrase “suite synergy” (at first I thought they were saying “sweet” synergy), is used constantly at this conference, referring to the single unified platform that has vanquished the decades-old frustration of software products not speaking with each other.

As Bernshteyn leaves the stage, the DJ enthusiastically takes the opportunity to rattle our eardrums again. I walk past him on the way out, and he has an excited gleam in his eye – he knows that we’ve got a huge event ahead, with more inspirational keynote speakers (including Sir Richard Branson), more exciting product launches…and plenty more opportunities to turn the volume all the way up.

Stay tuned for more from Coupa Inspire in the coming days!

5 Keys to Unlocking Successful Integrated Business Planning

Many companies still struggle with executing a strategic integrated business planning (IBP) process that effectively integrates demand planning, supply planning, and financial planning.

Successful Integrated Business Planning

Most simply put, the process should drive decisions on how to best meet demand (customer/consumer sales for existing and new products) within supply constraints in order to optimise financial return. Yet answers to the questions of each planning component of IBP (See Figure 1) can be dramatically different, and lead to very different results if addressed in silos versus an integrated fashion.

Put more bluntly, companies that successfully execute IBP achieve greater operational and financial benefits than those that do not. A key requirement for that success is collaboration, including a disciplined, repeatable process that drives integrated decision making, and a balanced scorecard for performance measurement.

Integrated Business Planning_Slide 2

Figure 1: Components of Integrated Business Planning

Based on our experience, we at The Hackett Group believe unlocking IBP can deliver the following competitive advantages and benefits:

  • Visibility into the financial implications of decisions and actions related to demand and supply.
  • Significant cost improvements driven by a more efficient and effective supply chain.
  • Improved top-line revenue growth.
  • Inventory deployment improvements, e.g. “the right product in the right place at the right time” based on customer demand, which reduce excess deployment costs.
  • Increased customer satisfaction as a result of more accurate demand planning and inventory availability which reduce out of stocks and back order issues.

However, with all the evidence that implementing IBP leads to important benefits in an increasingly competitive environment, why do many companies continue to miss out on the potential rewards of IBP?

We believe there are five keys questions that companies can use to open the doors to an effective and efficient IBP process. The first two questions deal with the market place and competitive environment in which the business operates, while the final three questions help assess internal improvement opportunities based on best practices for process, people, and data, systems and technology capabilities tied to IBP.

  1. What are the big-picture IBP trends in the marketplace?

Here are three examples of what leading companies are doing:

  • Streamlined annual planning and budgeting processes.
  • Balanced scorecards, with cascading metrics.
  • Unified data models and better integration of technology platforms to support advanced planning and analytic capabilities.
  1. How do our supply chain cost and metrics compare to other companies?

Benchmarking can serve as a useful tool for measuring performance against the competition. Armed with valuable key performance metrics for cost, process and resources, supply chain leaders are equipped to make critical decisions and address areas of opportunity.

As an example, the metric “Demand/supply planning costs per $1000 revenue” is an excellent indicator of overall efficiency (see Figure 2):

Demand & Supply Costs

Figure 2: Demand/supply planning costs per $1000 revenue across industries. Source: APQC 

  1. Are optimal planning processes in place throughout the organisation?

Establishing a best-in-class IBP process is the foundation for maximising the efficiency and effectiveness of any organisation. Example best practices include:

  • IBP goals and objectives are clear and well understood.
  • The IBP process evaluates gap resolution and business optimisation options.
  • Materials and reports supporting IBP are exception based. 
  1. Do we have the right people at all levels of the organisation, to own the plan, make decisions, and ultimately be held accountable for the plan’s execution?

Equally as important as the right processes, is having the right organisational talent and accountability mechanisms in place. Example best practices include:

  • Adequately staffed resources with required knowledge and skills.
  • Clear ownership and accountability.
  • Discipline to adhere to decisions made as part of the IBP process.
  1. Finally, are we equipped with the appropriate technology (tools and systems) necessary to fully support integrated business?

To enhance supply chain technology capabilities that both support and optimise the integrated business planning process, best-in-class organisations successfully employ supply chain systems and tools to maximise their IBP process.

Importantly, the firm must have the tools and systems needed to bring together and reconcile demand, supply, and financial plans in order to identify gaps and imbalances.

Read the full Hackett Group Supply Chain Insight Report here to learn more trends, best practices, and metrics which help supply chain successfully transition to Integrated Business Planning

Hanna Hamburger, a Director in the Strategy & Operations practice at The Hackett Group, has over 25 years of industry and consulting experience. She has worked extensively with consumer products and retail companies as well as life sciences companies in the areas of sales, marketing and supply chain process, technology and tools, and organisation performance improvement. A longer version of this article is available on The Hackett Group’s website.

Raise Your Glasses to the Cloud

Does being stuck in our ways, and doing things “the way they’ve always been done”, mean procurement misses out on the benefits of the Cloud?

The Cloud

You can download the latest GEP white paper on the impact of cyber security, and the benefits of a cloud-based procurement technology solution here.

You can buy flip-flops that have a bottle opener built in to the sole.  Notwithstanding the sartorial choice of sporting said footwear, the synthesis of the two household objects into one ‘solution’ was clearly something born of necessity, or desperation, or more likely both.

The crown cap on a beer bottle, the correct name for which is actually a misnomer – the ‘crown cork’ – is 124 years old and still going strong. The ubiquity of the particular type of stopper means that almost everyone can access a tool designed with the express purpose of removing one, but finding oneself on the beach without one can lead to some unusual inventions, or some risky and occasionally painful improvisations.

Bottle Opener Flip Flops

Necessity – the Mother of Innovation

What is surprising is that it took seventy years for someone to come up with the bright idea of combining the crown cap with a screw thread on the bottle – negating the need for a tool altogether, and even today bottles of beer that one can open with a simple twist are far from the norm.

Interestingly, that most useful combination is still limited to mass-production, mass-market brands, and rarely or never to be found on small-scale, independent, or craft brewery products.

The same, of course, applies to wine. There is unquestionably a huge resistance to screw caps on premium products from the industry, the consumer and the media alike.  Until, that is, you actually talk to the real experts.  Not the self-appointed armchair connoisseurs – I’m not being denigrating, I’m definitely guilty-as-charged – but those who really know their stuff.

I’ve met wine producers, merchants and critics all of whom are desperate for the screw cap to be considered as acceptable at the “high end”, as at the mass-market end, because the product is only better as a result.

Consider the labour-of-love winemaker who has to play Russian Roulette with their prized vintage every time a piece of possibly-contaminated tree bark gets stuffed in the neck of a bottle.

But, on the whole, we consumers feel it cheapens the product, and the lack of ritual and satisfying “pop” detracts from our enjoyment of the contents. The real experts say it’s just snobbery – and, of course, they’re right. But today there remains a relatively low ceiling on what a restaurant can charge for a bottle with a screw cap. Good wines simply don’t come in screw-capped bottles.

What finally convinced me of the ridiculousness of that position was finding myself with wine but without means of access. Today I find myself tutting in a very English manner if I find I need to go get a corkscrew to open a bottle.

Migrating to the Cloud

I find myself in the same mindset when thinking about the Cloud.  For a while I felt somehow discomfited by the idea of putting all my files, and music and images and books and data in the cloud, preferring instead to create my own personal cloud of NAS drives and IP sockets so that I could access what I wanted, wherever I was, but I would still ‘have’ all my data.

How daft is that? If my NAS drive goes down (which it has) who has to run around in a panic trying to fix it? If I move house or country (which I have) who has to handle the business of relocating and reconfiguring equipment to deal with the change?

You see the point, I’m sure. I was on a hiding to nothing. Insisting on a model of how data storage should be, because that’s how it’s always been, supported by some spurious mythology of physical location, is no different to saying screw-caps cheapen the experience of drinking wine. Nonsense.

Cutting away all the snobbery and enjoying wine starts and ends with glass to mouth. What happens up to that point might be interesting, but it’s not in the least relevant.

Now I find myself tutting in overly-dramatic fashion if the service or software I need is NOT available in the Cloud. Install? Oh, really!

Cloud computing is a loaded subject. There are genuine concerns, and genuine things to be concerned about, when considering moving business critical systems into a new environment.

But, let’s make no bones about it, you need to be thinking about those things anyway. The threats and risks won’t go away if you choose not to pay them any attention.  But the opportunities sure will.

We’ve applied a great deal of brainpower to design and build a cloud procurement platform that delivers a massive bang-to-buck ratio, in a secure and highly performant environment, and our two-part paper, ‘Securing Procurement in the Cloud of Tomorrow‘, is designed to help business and IT people alike start a meaningful dialogue on the subject. The Cloud is here, it’s huge, and growing.

But even now I catch myself out. Trying to improve performance of my video editing capability at work I spoke to our splendid and ever-cheerful head of IT about getting some kind of box dedicated for the purpose.

“Have you thought about a cloud video-edit-suite solution?” he said.

Well, d’uh!

Enterprises should be moving their procurement processes to the Cloud, say GEP. For more on this, download the latest white paper research.

For more information on high-performing procurement software, visit the Smart by GEP website.

Procurement’s Future: Upskilling in Supplier Relationship Management

Why upskilling in Supplier Relationship Management is key to the future success for the Procurement profession.

Supplier Relationship Management

The rapid development of artificial intelligence and cognitive technology is completely redefining the boundaries of what is possible for procurement. To fully take advantage of this new era and remain relevant, CPOs and their organisations will have to react very quickly and re-orientate more than ever their focus towards supplier relationship management.

Why is SRM fundamental to Procurement?

The traditional and archetypal focus of the CPO has been on cost savings, whilst arguably neglecting the supplier relationship. We have reached the point where applying pressure to suppliers to cut costs is unsustainable. It has been proven that working on improving relationships with suppliers is the key to fostering innovation; to go beyond just savings and develop more value adding capabilities.

Secondly, with artificial intelligence and technological advances comes an increasing level of automation, not only of tactical and operational procurement tasks, but also complex sourcing activities, such as RFX creation, analysis, or even scoring. Even market research or negotiation can be improved, to a point where technology will perform these tasks in a better, more efficient and secure manner.

This will allow more time for procurement to focus on supplier activities after contract signature, such as performance management, or supplier collaboration and innovation programs.

In addition, procurement teams will be equipped with the tools to navigate the procurement process more quickly, easily, and in an even more compliant way. It may lead to the point where there is less of a necessity for a full, dedicated team. It is therefore important that the role of supplier management remains within the remit of the Procurement function, to avoid inefficiency and over-complication.

This is especially true for companies where part of this process is handled by different organisation. To improve in this area, there must be one owner who can efficiently coordinate the strategy, the training, and the performance management.

Another benefit of becoming more skilled at Supplier Relationship Management (SRM) is reducing risk. With a strong SRM process, Procurement can not only very quickly identify potential supply chain disruption, but also proactively mitigate any event that may occur, by fostering a collaborative and transparent relationship with suppliers.

Generating Innovation Through SRM

Supplier collaboration has also become an increasing focus for Procurement, especially where cost savings have been stretched to breaking point, and yet there is still requirement to go beyond this.

Suppliers and Procurement organisations have to work hand in hand to be even more cost effective and extract additional value from their relationship, and this on a long term basis. SRM is an invaluable approach to promote and generate innovation.

There is a well-known anecdote regarding a multinational car manufacturer, just one example amongst many others, of the benefits of good supplier relationship management. The company wanted to cut the cost of the window trim on their car, and turned to their suppliers for help. The suppliers created a new resin which would streamline the manufacturing process.

The result was a reduction of 2,700 gallons of diesel fuel and 60,000 pounds of carbon dioxide, by removing 19,200 truck miles transporting the parts between factories. It was a move that was both good for the environment (look at that carbon dioxide reduction), and dramatically cut costs.

Undeniably, in this context, by leveraging partnerships and collaboration, procurement teams become the customer of choice. They can therefore encourage and gain access to new innovations or insights, which could stand to be an important competitive differentiator.

What skills does the future Procurement workforce need to develop?

With this in mind, CPOs need to assess how their staff interact with suppliers, in order to determine whether they have the right skills, and also to understand what is missing, to fully unlock these supplier relationship management capabilities.

On that basis, and with the new direction that Procurement is taking, future procurement professionals should be looking to develop such skills as influencing leadership, change management and creativity. These are, arguably, not amongst primarily targeted skills in a current buyer profile.

With the advent of data insight and technology enhancing Procurement activities, CPOs will also have to upskill their teams to be able to fully maximise the potential of the tools available to them, as there is little doubt of the value available here.

Aside from data and tool utilisation, the human side is equally as important. Acting on insight and fostering the ability to listen, earn trust, and foster a high level emotional intelligence and creativity should also be part of the soft skills of the new buyers.

In an environment where technology will be ever-present, it will be even more important to master these skills, as maintaining customer satisfaction and high value relationships will continue to rely on the human side of the service management.

It becomes urgent not only for CPOs but also for the professionals working in Procurement today, to ask themselves about what should we do if we want to stay relevant to our organisation in 5 years’ time? How will we be able to fully endorse roles such as Supplier Relationship Manager and deliver value? Should we go on new training courses, and re-skill completely? What type of skills should be developed, and where and how can we acquire them?

These questions will need answers, and those who will address them first will obviously be ahead of the crowd in fostering innovation and adapting to the Procurement world of the not-too distant future.

IBM are one of the sponsors of the Big Ideas Summit, being held in London on April 21st. 

If you’re interested in finding out more, visit www.bigideassummit.com, join our Procurious group, and Tweet your thoughts and Big Ideas to us using #BigIdeas2016.

Don’t miss out on this truly excellent event and the chance to participate in discussions that will shape the future of the procurement profession. Get Involved, register today.

Showcasing Your Big Ideas – Tackling Maverick Spend

Ahead of the Big Ideas Summit 2016 on April 21st, we’re on the hunt for your Big Ideas. Stuart Brocklehurst discusses how procurement can elevate its role by tackling maverick spend.

At the Big Ideas Summit 2016, which takes place on 21st April,  we will be asking our speakers and attendees to record their ‘Big Ideas’ live on camera for the whole of our Procurious community to see.

But we also believe that every single procurement and supply chain professional has a unique vantage point in the industries, communities and businesses they work in. You have been submitting your Big Ideas to us, and so far, we think they have been great!

Stuart Brocklehurst, Chief Executive at Applegate Marketplace

According to a survey by KPMG, on average 40 per cent of organisational spend happens without any input from procurement. At a time where procurement needs to be delivering value to the business, tackling maverick spend in the organisation is a good place to start.

Stuart’s Big Idea is exactly that. He believes that for procurement to be valued for its strategic role, it needs to demonstrate its impact on the whole organisation.

Stuart goes on to say that this can only happen through giving access to user-friendly solutions, and demonstrate the benefits of doing this across the organisation.

How to Submit Your Big Idea

We don’t mind if you film your submission on your phone, tablet, laptop or PC. However, to help you out we’ve compiled a list of some of our recommended methods for reaching out.

Once you’ve completed your film, you can reach us by email ([email protected]); on Twitter (@procurious_) or via Google Drive or Dropbox (using [email protected]).

You can find all the information you need on recording and submitting your Big Idea here.

Want to know more about Big Ideas 2016? Then visit www.bigideassummit.com, join our Procurious group, and Tweet your thoughts and Big Ideas to us using #BigIdeas2016.

Don’t miss out on this truly excellent event and the chance to participate in discussions that will shape the future of the procurement profession. Get Involved, register today.