Careful planning and a willingness to adapt help ensure that your key suppliers stay with you when you’re implementing a new tech system
Implementing a new tech solution can be like a voyage into a new world. There is the promise of efficiency, the draw of increased margin, and the assurance of better working relationships. But much like a voyage, reaping the benefits of process automation in procurement means that all parties must be fully on board – including suppliers.
Implementation is a complex process in itself, with many important steps to take before the new system is in place. Even if companies implement the best available solutions for their processes, their biggest obstacle is often the resistance of their suppliers to implement the new cloud system.
Visibility is important to any journey. When it comes to supply-chain collaboration, companies don’t just need a supplier or vendor, they need a trusted partner to accompany them. But how? Here are three steps to help you make sure your suppliers are on board with you on your voyage to new tech.
1. Get organised and build a strong message
You know your destination, but does your entire crew? The success of your implementation will depend on how well you communicate the changes – and proper expectations – to your suppliers.
When building your case, you’ll need to consider which suppliers you want to get on board. Don’t overwhelm your resources, have a manageable list of targeted suppliers and ensure that all of your supplier contact information is up to date. While this process can be time-consuming, it’s crucial that you begin with an updated supplier database to ensure efficient and effective communication.
Once you have your crew accounted for, create a detailed communications plan that includes messaging before, during and after the implementation of your new cloud system. Your messages should build a sense of urgency and excitement about the implementation, as you’ll want suppliers to get on board in a timely fashion to not cause any delays.
Sharing the value proposition will help encourage suppliers to actively participate in the onboarding process. Catering your communication to each specific population, you should focus on answering a few key questions:
What’s in it for them?
Which option is right for their organisation?
What steps do they need to take right now?
Build a supplier-facing portal where suppliers can get their questions answered quickly. Realize that no matter the incentive to your suppliers, building a united front may mean burning some bridges – you can’t start your campaign with offering a contingency plan for those that don’t adopt. Enforce the mandate and don’t look back.
2. Take the helm…but first, delegate
One of the most common pitfalls in supplier onboarding is when a client takes on too much or do not properly define roles and responsibilities. Not only is this bad optics for your project, but it discourages suppliers, making it more difficult to achieve your enablement goals.
Once you have a clear communications plan in place, it’s necessary that you determine who is responsible for what during your voyage. Have a defined escalation process with clear roles and responsibilities. Make sure buyers and category managers are on board with your plan and create a step-by-step process defining who will do what when a supplier declines to enroll.
This will hold all parties accountable, including your suppliers, and avoid unwelcome surprises or project launch delays.
3. Remain consistent, realistic, and optimistic
Once the voyage to the tech new world has started and implementation is underway, make sure you monitor progress.
Stay consistent in your message but be open to the fact that some supplier populations may need more time and support than others – or may not reach your destination at all. Offer incentives along the way to increase the perceived value of your system and encourage higher rates of adoption.
Keep in mind that when implementation ends, the process is not necessarily over. To continue to ensure that suppliers are being added to the platform, you’ll need to develop a long-term plan and dedicate resources to manage the solution after it’s implemented. Perhaps consider making the roles you have defined or the standard procedures you have created permanent. Individuals that are responsible for enablement will be able to look at data regularly to identify changes in volume, follow-up with suppliers, and make adjustments as needed.
With these strategies in place, you can embark on your procurement tech voyage ensuring that you and your crew stay the course to success – and can reap the benefits promised at your destination.
Did you know that Matt has teamed up with Procurious to launch ‘Major Tech Fails’ – a series looking at everything from implementations to getting buy-in. Register here
But what exactly is Industry 4.0 technology in the supply chain? And how can you get your team up to speed?
What application is there for Industry 4.0 tech in supply chain?
Put simply, the fourth industrial revolution (or Industry 4.0) is a drastic change in the way things are made and distributed.
Such rapid tech advancements are triggering a digital overhaul of the supply chain. Some of these technologies include:
· Artificial Intelligence (AI)
· Internet of Things (IoT)
Here’s a bit more about those technologies, and how they relate to the supply chain.
What it is: Blockchain is a network where people can store digital records in a shared, unchangeable way. There is one version of the truth, which helps build trust between different parties in the supply chain.
Carrefour’s produce and meat suppliers record a product’s journey from farm to store shelf using IBM’s enterprise blockchain network – IBM Food Trust. That way, a customer simply scans the product QR code with their smartphone, and they can instantly learn the product’s provenance.
That connectivity allows them to operate a large organisation as flexibly as a start-up. Just how flexible is it?
“We can produce the base and then choose the colour for a lipstick right at the very last moment,” as Operations Chief Digital Officer Stéphane Lannuzel puts it.
What it is: 5G (or fifth generation) wireless technology will make it faster and easier to connect on mobile phones. You’ll be able to download videos at lightning speed, and say goodbye to awkward lags when videoconferencing. It has bigger capacity than the current 4G, meaning you can connect a lot more sensors and smart devices at once.
The firm predicts that in the US, around one-third of production roles could change profoundly over the next decade. That means the way you interact with all stages of supply chain management will change as well.
So it’s essential to get up to speed, and help your team prepare too.
So what’s the best way to do that?
First, a skills analysis
Once you have a plan for new technology adoption, look at the skills you need to make it happen.
But the cost of training is far less than the cost of your company being left behind because it didn’t adopt new technologies fast enough.
The right training looks different for every company. You might choose in-house, external, or even a mix.
One popular option is the IBM Sterling Supply Chain Academy. It acts as a complement to other training you offer, giving your team access to skills aligned to market demand.
Your team can learn the needed skills to:
Build smarter supply chains
Deliver on customer needs through smarter fulfillment
Reduce the cost, complexity and risk of supplier onboarding and management
Why any of this matters
Ultimately, getting up to speed on Industry 4.0 technologies is about more than transparency or agility.
Global supply chain disruption has accelerated the need to make changes towards the way people make and buy goods.
That means supply chain professionals have the opportunity (and responsibility) to use their purchasing power for good, according Professor Olinga Ta’eed, Director of the Centre for Citizenship, Enterprise & Government.
When you couple large amounts of money with positive ideology and advanced technology, Professor Ta’eed says it’s the “biggest instrument to change the world.”
“Let’s use that money to nudge society into better ways [and] behaviour,” he says.
“Doing well, doing good, making fiscal sense of this value creation across stakeholders. There’s no other domain positioned to really deliver that long-term value other than supply chain because we are truly end-to-end.”
“Supply chains have the ability to save lives,” she adds. “We are literally seeing this unfold before our eyes.”
How do you avoid making a potentially costly mistake when choosing a tech solution?
The selection of a tech solution is one of the most contentious exercises procurement organisations can go through. There are few other things that so many people in the organisation will come into contact with on a daily basis.
Get it right and you’ve probably only met people’s expectations. Get it wrong and, not only will those people make it known that the solution isn’t performing, but your organisation will also face living with a (costly) mistake for a long time.
There are countless factors that can complicate the process, from a seemingly never-ending list of requirements from across the organisation, to sorting out ‘needs’ from ‘wants’ when it comes to the requirements. And that’s not to mention that procurement teams tend to struggle when buying software for their own department, each member brings their own baggage from working with previous providers, and each individual brings their own personal preferences into this selection.
Even if you think you are going to do things differently, you may end up inadvertently making a mistake somewhere along the line. To help you out on your next tech selection, we’ve compiled a list of the “5 Most Common Mistakes Made When Selecting a New Tech Solution.”
1.Choosing ‘What’ Over ‘How’
Most software selections follow a similar pattern. The selection team meets with key stakeholders and compiles a list of requirements. The requirements are then categorized into groups denoting what is a ‘must have’ versus a ‘nice to have’ and anything in between. This then creates a scoring system that helps score the RFP responses.
That is all good, but what I see many times being missed is there is way too much focus on ‘what’ a solution does vs. ‘how’ that feature/function is being delivered to address your most complex use cases. Even if the feature is something your organisation needs, there’s no guarantee that how it works will suit your organisation and be widely adopted.
2. Picking looks over performance
It’s a new, all-singing, all-dancing system that looks the part. It’s got a sleek, visually impressive and stimulating User Interface. Buttons are in intuitive positions and there’s a color scheme designed to make the user feel more relaxed.
But the look of the solution belies the issues that users will experience due to a poor underlying system architecture. On the surface, any provider can make the simple look intuitive and easy, but what about the more complex use cases and scenarios? The best solutions have the ability to make even the most complex use cases appear easy and intuitive.
And don’t be fooled, sometimes systems that focus only on a few use cases but excel at making them look easy, may lack the depth and breadth to address other key areas your users need.
We have also found that some systems focused so much on making their new tech shiny and appealing to the eye, that they missed building it on a strong foundation. Organizations that have complexity and high volumes may see their systems performance degrade which negatively affects user adoption. No matter how easy the system is to use, if it is not up and ready when you need it, end users will push back.
So don’t be drawn in by the appealing look of a new system. Instead, really get to understand how the system was architected and if it is able to keep the complex simple for your end users.
3. Opting for low cost over ROI
Another thing to avoid when selecting a tech partner is a race to the bottom on price. The cheapest solution is not always the best solution. It may well end up costing you more when it comes to lost opportunity throughout the life of the agreement, cost overruns on implementation, integration, lost productivity and, in the worst cases, terminating an agreement early and going back out to the market.
Procurement, and the wider business, need to understand the true Total Cost of Ownership of all the solutions, which will in turn allow for a more true calculation on the Return on Investment (ROI). In order to calculate this effectively, it is a must to include the difference in savings one platform will achieve vs. the other. Including those lost savings(if there are any) into your Total Cost of Ownership comparison may show that while the cost of the software is lower per year, the true cost is much higher.
So, before you settle for the low-cost option, understand what value the solution is giving back to the business and factor that into your decision-making process.
4. Boardroom decisions without end-user input
We’ve all worked in businesses where a new tech solution is implemented, only for it to fail to deal with any of the key issues it was meant to address. Many organisations do not engage end-users at all or speak to them after the selection has already been made. Only then to find out that the solution that was selected in the boardroom, misses on many of the key use cases.
Not only does this make your employees feel undervalued but it also breeds resentment every time they must use the solution that hasn’t solved any of their problems.
Take time to include your end-users in the decision-making. They are the ones who will use the solution most, so their input could be the difference between success and failure.
5. Failing to Complete a Success Blueprint Prior to Software Selection
You’ve fully detailed your requirements, gathered information and feedback, and conducted an extensive search of the market. You feel like you know which solution is best for your business, because the customer is always right, correct? Maybe not when it comes to tech solutions.
Organizations will frequently select the shiny new object or the solution that costs less. Other times they will go with the software that conduct the best demo or has the best sales team. Those are typically not the best indicators of future success.
Trusting a demo or a great sales presentation is very risky. Planning for success and putting the spotlight on what really matters is key to mitigating your risk and creating a predictable outcome.
The RiseNow Success Blueprint that we talked about during the “How To Make Your CEO Fall In Love With Your Tech” does just that. It also helps organizations navigate the software selection process to make sure success is achieved with the best platform for your organization.
The trick to not making these mistakes is knowing about them in the first place and putting a proven plan in place to mitigate them. Yet even then, there’s no guarantee you won’t make a mistake, but the odds will definitely be in your favor. And keeping these 5 essential tips in mind the next time you go out to market may help you avoid making the same mistakes again.
To go deeper on the perfect tech implementation, tune in to our series ‘Major Tech Fails.’
Here’s your simple explanation of six technologies that will change the future of procurement.
Are you tired of nodding along when people throw around terms like ‘blockchain’ and ‘machine learning?’
Fear not. Here is your simple guide to six technologies that will change the future of procurement. Spoiler alert: some of these are already here and shaking up the supply chain.
What it is: Quantum computing is an entirely new kind of computer based on the science of quantum mechanics. Sounds intimidating, right? Don’t worry – this stuff is pretty cool.
Quantum computing is exciting because it’s not just some super powerful version of the computers we already have, explains physicist Shohini Ghose. “Just like a lightbulb is not a more powerful version of a candle, you cannot build a lightbulb by building better and better candles.”
It’s far more advanced than our current computers, so it can solve problems that we can’t even begin to solve now.
How it works: If your personal computer had a personality, it would be a stubborn person who can only see things in black and white. The answer can only be 0 or 1. That’s known as a bit.
Quantum computing is more open minded. It knows life isn’t that straightforward. The answer could be 0 or 1, or anywhere on the spectrum between the two. That’s known as a qubit (pronounced cue-bit). That spectrum makes quantum computing super powerful.
As Wired’s Amit Katwala puts it: “If you ask a normal computer to figure its way out of a maze, it will try every single branch in turn, ruling them all out individually until it finds the right one. A quantum computer can go down every path of the maze at once. It can hold uncertainty in its head.”
That tolerance for uncertainty opens up a world of possibilities, like uncovering new chemicals or speeding up the discovery of new medicine.
Katwala adds, “If you can string together multiple qubits, you can tackle problems that would take our best computers millions of years to solve.”
Why it matters for procurement: Quantum computing will vastly improve logistics problem solving.
IBM (one of the biggest players in quantum computing) gives the example of global shipping. If companies could improve container utilisation and shipping volume by even a tiny fraction, it would save millions and reduce the carbon footprint. That’s the scale of quantum computing’s ability.
It can also help supply chain managers improve decision-making and manage risk by responding in real-time to changing market demand.
Internet of Things (IoT)
What it is: The Internet of Things (IoT) is taking real-world objects and connecting them to the internet.
You’ve seen this with the boom in ‘smart appliances’. These home appliances are internet-enabled, letting you turn on your coffee maker, start a load of laundry, and even pre-heat your oven with just a smartphone.
How it works: The Internet of Things lets you create a network of devices that can ‘talk’ to each other and share data.
And this explosion of smart products will only get bigger. In fact, there could be more than 41 billion IoT devices by 2025. Why? Cheap computer chips and widespread Wi-Fi.
Why it matters for procurement: Even though the Internet of Things is widespread in homes, the biggest market is actually businesses. The so-called Industrial Internet of Things (IIoT) is already commonplace – especially in manufacturing through the use of sensors and other monitoring devices.
These internet-enabled devices give companies greater control, and even help ensure safety. For example, pharmaceutical companies use IIoT temperature sensors when transporting vaccines to make sure they stay at the right temperature.
McKinsey notes that sensors are also used to monitor container-fill levels: “This real-time transparency allows the logistics team to manage the material flow more accurately and order raw materials and other inputs closer to the date they are needed, reducing inventory.”
The firm says these monitoring abilities are even more important in a post-pandemic world.
What it is: Machine learning is the ability of a computer programme to ‘learn’ and adapt based on new data, all without the help of a human.
How it works: The programme sifts through huge amounts of data looking for patterns. Then companies use those patterns to inform decisions and influence customer behaviour. It’s how Netflix chooses what shows to suggest for you. The more you watch on the platform, the more data it has about you and the better it can predict what you’ll like.
Why it matters for procurement: There are many use cases for machine learning in the supply chain. One especially relevant one is improving demand forecasts. At the moment, it’s hard to account for all the variables in supply chain. As McKinsey points out, there are long-tail items, extreme seasonality, customer preference changes, and media coverage that all render forecasts useless.
Another example comes from professional services firm EY. The firm was asked by a major shipping port to help with the logistics of 100 vessels coming and going each day. When predicted arrival times were off, the port faced expensive bottlenecks. So EY used machine learning to analyse different sources of data – like tidal patterns and historical arrival information. It combined that with satellite navigation for more accurate tracking. As a result, the port saved more than $10 million from increased accuracy.
Through machine learning, computers can process more data points about a business than a human could ever hope to analyse. That means unparalleled visibility in the supply chain.
What it is: A blockchain network is a way to store digital records so different parties can all access the same version of the truth.
The records are unchangeable, which helps build trust by taking away human bias and politics.
How it works: Enterprise blockchain is a blockchain network that is specifically for businesses. It’s different from other types of blockchain because it’s private. The only people who can access records are those who have been invited.
Apart from blockchain records being transparent and unchangeable, they can also improve speed.
For example, the United States Food and Drug Administration recently finished a pilot programme with IBM to track and identify prescription drugs using blockchain. The results? It now takes two seconds to trace medicine, instead of 16 weeks.
Why it matters for procurement: Of all industries, blockchain has made the biggest impact in supply chain and logistics. Several companies already use the technology to keep tabs on what’s going across the supply chain.
One example is US retail giant Walmart, which requires all lettuce suppliers to be part of its blockchain network so it can track the product’s journey from farm to shelf. They use IBM’s enterprise blockchain as part of the IBM Food Trust.
Some retailers are using this traceability to improve customer confidence. They include QR codes on packaging so customers can simply scan with their smartphones and see a product’s history.
What it is: Human augmentation is using technology to give humans increased physical and mental abilities. One example is an exoskeleton, which is a wearable robotic suit that makes humans stronger. And you thought Iron Man was fiction…
Most technological advancements seem to take humans out of the equation. Yet this area is all about improving human capability with technology.
How it works: Essentially, human augmentation is about making up for human design flaws.
Gartner describes four main types of human augmentation: sensory (hearing, vision, perception), appendage and biological (exoskeletons, prosthetics), brain (implants to treat seizures) and genetic (somatic gene and cell therapy).
One example is the ability to control a machine using just your mind. By popping on a wearable device, a person can operate machinery with the power of thought. Who’s developing such a device? The US government, of course.
Why it matters for procurement: The obvious use for biological augmentation like exoskeletons is in warehousing, automotive, and manufacturing. Benefits include letting workers lift heavy things with minimal effort, protecting them from bodily injury, and working longer without fatigue.
It gives the example of a robot pulling data from a PDF into an Excel document, using that information to generate an invoice, then sending the invoice by email automatically. The idea is letting the bots do the repetitive stuff, freeing you up to do higher-level thinking.
At this rate, it might not be long until automated sourcing becomes the norm in procurement.
Does automation make you nervous about your role?
You aren’t alone, says Natalie Chapman, Head of Urban Policy at the UK’s Freight Transport Association (FTA).
“Anxiety about mass automation is widespread; in one study, 34% of UK workers surveyed believed automation would result in large job losses and that few will be replaced by new and different roles,” Chapman says.
Encouragingly, though, she adds that FTA research shows technology will be complementary, replacing routine tasks rather than job roles.
“In response to the rise of automation in the workplace, skills demand will change in the coming years,” Chapman says. “The need for workers skilled in manual dexterity and precision will decline – as these tasks can be completed by machines most easily – and in its place, employers will seek staff skilled in analytical and innovative thinking, creativity and emotional intelligence.”
So, the good news is the robots aren’t stealing our jobs. At least not yet.
Want to know more about all things tech? Tune in to our recent series Major Tech Failswhere we set you up for a total tech-success.
NOW is the time to start a robust process to select, fund and implement a new technology system.
Your CFO needs some love right now – supply chain isn’t something they’ve had to worry about much before…because you had it all covered!! For the first time in their careers they’ve had to get into the details of how you keep it all going. Your poor pandemic-battle-scarred CFO is now looking for some new ways to mitigate future business continuity risks.
Procurement and supply chain leaders around the world have the answers to future potential business disruption woes – what’s needed is some serious investment in technology!
COVID-19 has placed the risk of future global supply chain disruptions at the top of the C-suite’s agenda. Not wanting to be caught out again, company leaders are desperate for a better, faster way to recover the next time a crisis strikes.
Their eyes are firmly fixed on supply chain.
So, it’s time to wipe the dust of all those technology business cases – and get on Zoom, pucker up to the c-level and ask for the cash.
It’s the right time
The pandemic caught us out. It stripped away the luxury of time, revealing the real supply chain risks that we knew had been lurking just below the water line for years.
The tide went out and our weaknesses were exposed – a lack of visibility into our multi-layered supply chains, an overdependence on single geographies and single supply source and a lack of agility to pivot and close the supply gaps.
As we move forward, supplier risk, supplier collaboration, value analysis, cost reduction, quality, and compliance will be more important than ever.
NOW is the time to start a robust process to select, fund and implement a new technology system.
How to pucker up
But how can you make sure you select the right system and construct a convincing business case, especially when budgets are being slashed across the board?
Here’s your guide to technology selection and adoption, pulled together from years of experience.
Step One – make sure you meet the business needs
It starts with understanding needs. As procurement and supply chain pros, we all know how to run a solid needs analysis….so I don’t need to labour this point.
To decide what works for your company and suppliers, remember the 80/20 rule. For example, if 80% of your spend is on contingent labour, you are better off looking at a system that specialises in that functionality.
What system is best?
Once you know your company needs, it’s time to narrow down the provider playing field.
This can get confusing, because you might pick your top three and accidentally end up comparing apples to oranges. One system could be a full end-to-end suite, and you’re comparing it to a contract management point solution and a sourcing tool!
It’s easy to get overwhelmed; there are literally hundreds of e-procurement technology suppliers in the marketplace right now.
About 10 years ago we saw a big push towards ‘best of breed’ solutions. There were very few fully-integrated suites that were intuitive and easy to use. Plus, a lot of companies had budget limitations, so they looked to point solutions for contracts, P2P, sourcing, supplier management, analytics, etc.
That worked for a while, but then it became a nightmare to maintain all those integrations and the systems lacked true interoperability.
Then came the race for fully integrated suites, which led to the likes of SAP Ariba, Coupa, Ivalua and Jaggaer who emerged to lead the pack today.
Will the strong preference for the fully integrated suites continue? That remains to be seen. One thing is for sure, we will see a thinning out of the market as some of the best of breed start-ups struggle for cash.
But only you will know what’s right for your company.
Finding the love…and the cash
Once you’ve chosen your tech system, it’s time to get senior-level buy-in. How can you make your case convincing?
It comes down to giving a clear, compelling ‘why’. Why now? Why this system? What will it mean for the company?
Some great messaging that would resonate with the c-suite right now would be:
Systems give transparency
Systems give control
Systems give confidence
As well as these overarching messages, you should tailor specific business case messaging and justification for investment in your system for different members of the c-suite. For example:
Chief Executive Officer – mitigate business continuity risk and future profitability
Chief Financial Officer – cost control and visibility
Financial Controller – well, it’s obviously about control!
Another tip for developing your business case messaging is to reach out to your online peer community and look through social media, to find stories that support your reasons for investing in tech.
There’s nothing the c-level likes more than to do better (or avoid the same mistakes) than the competition. Your stories and examples on how peers are handling problems will be a powerful tool for motivating your senior leadership team to invest in your recommended technology.
Keep a c-suite huddle
It’s critical to ensure you have a wide base of support across the senior leadership team so that your project has strong foundations.
Stay close to the c-suite throughout the project. Don’t ever assume the support you secure today will endure. Keep them regularly updated to ensure your technology project stays top of mind (and the corporate strategic priority list!).
Also, beware the trophy-seeking sponsor who could be using your supply chain technology project as a pawn in their political power play. It is always difficult to pick these people, but the wrong choice could threaten your project’s success. You don’t want everything to go down the drain when your board sponsor’s career bets don’t pay off.
Ensure change management isn’t funded out of small change
Business cases for tech have always focussed on headcount reductions (hard numbers based on FTEs taken out of Accounts Payable, administration etc) and efficiencies (more of a soft number) on the value side, and licensing and implementation on the cost side for investment in technology. Don’t forget to also factor in the total cost of ownership. Customisation costs, implementation, and productivity losses and gains are all important financial considerations.
All of these cost and other benefits are important, but you must ensure you include a significant budget for change management, training, user implementation.
As a profession, we have not had enough focus on how to implement technology; that’s our weak point. It’s difficult to ensure the organisation is gaining the full benefit of the system they have invested in – and for the most part, we do a pretty lousy job of it.
That’s because these are change management projects, not technology projects. It’s so little about systems and so much about the people who use them.
Too often, the implementation budget is the first thing to go when CFOs want a quick financial win. Don’t fall prey to their argument that people will work it out, or that it’s all straightforward. That logic is precisely how and why many technology projects fail.
Fiercely guard your change management budget, and make sure you have a dedicated project team to make it a success.
You can do this
This is your chance to step up and lead, showing your potential for a more senior role.
Given the high failure rate of these systems right now, it may be a high-risk strategy to take on the leadership of a procurement or supply chain technology implementation. But with risk comes reward; your successful project will be a great asset to your career progression and increase your visibility.
More importantly, it will prove that you understand the business and know how to solve complex issues.
As we work our way through this latest supply chain disruption, we are (sadly) capturing the real costs of this pandemic and will have much stronger financial proof points for investment in technology.
If this kind of disruption happens again, we know the magnitude of what it is going to cost. So we must put systems in place that will respond much faster to mitigate these potential losses.
Now is the time to step up and put forward your argument for investment. We may never have such a fertile and receptive audience as we do right now.
Act now, while the spotlight is on supply chain. Don’t waste a crisis.
A review of the key elements in supplier management for manufacturers and how Source-to-Pay procurement technology can support the journey towards supply chain resilience and agility in times of crisis.
As the COVID-19 pandemic disrupts global supply chains, procurement organizations around the world are scrambling to react. There are many supply chain management lessons to learn from the Covid-19 crisis. However, some organizations are better prepared to weather this storm than others. Many of these organizations are already using Source-to-Pay technology and are now realizing more than ever that technology is a “must have” to ensure their supply chain remains resilient and agile throughout a crisis. In this article we’ll review how supplier management capabilities in Source-to-Pay technology can free-up and enable a manufacturer’s direct material procurement team to do what they do best to ensure the supply chain remains resilient and agile: becreativeand strategic.
Supplier Data Quality & Management in Decision Making
It may be the most basic level, but data management may also be the most daunting for some organizations. Supplier Data is at the core of every procurement activity, and it is critical for those dealing with direct materials in manufacturing. Often, what procurement teams end up with are multiple collections of data stored in tiny, disconnected data silos, such as: spreadsheets, MS Access databases, email and even the dreaded manila file folder and sticky note.
Obviously, these methods of capturing and recording data have limitations, and these limitations can hamper decision making in several ways, and ultimately impact the management and resilience of the organizations supply chain. Some of these challenges include limited:
Ability to collaborate, identify opportunities or issues and act
Transparency, or ability to scale data, across an organization
Ability to enrich data sets with other, related data sets.
These challenges in the direct material supply chain pose a real threat, especially in a time of crisis and let’s face it, there is no shortage of events that could jeopardise and/or disrupt a business, potentially impacting their profitability, business continuity, image, and reputation. Often, organizations try to band-aid the data problem, which can cause long term problems and inefficiencies long into the future. This is where Source-to-Pay systems can help – by providing procurement teams with a system that centralizes information and ensures data quality meets a high standard. This in turn enables procurement teams to better evaluate a situation, make decisions and act.
Managing a complex network of direct material suppliers
Manufacturing supply chains are notoriously complex, and this fact has been a common topic of the news media throughout the COVID-19 pandemic. It’s a manufacturing organizations’ procurement team that is on the front lines fighting for the supply chain’s survival. However, procurement teams often lack consistent visibility beyond their tier 1 strategic suppliers for each product line, and this limits a company’s ability to ensure the materials and processes required to produce a product are consistently available.
It’s not uncommon for direct materials procurement teams to capture information on sub-tier 1 suppliers. However, organizing and making sense of this data is so challenging that it is uncommon for all but the most critical product elements in the most mature procurement organizations. This is where Source-to-Pay (S2P) technology can help, by enabling procurement teams to capture important information across the entire supply chain so they can identify potential issues early, initiate collaboration with the necessary parties and take action to support suppliers and mitigate potential issues.
Risk & Performance Management
The evaluation of direct material suppliers is often nuanced and complex depending on the final product, regulatory concerns, and other requirements. However, it is up to the procurement team to find a way to ensure that suppliers:
Are not risky;
Perform well over time;
Meet quality & regulatory requirements;
Maintains the right certifications, and more; and
Meet Corporate Social Responsibility (CSR) expectations.
Empowered with all this information, procurement teams can ensure supply chain continuity and resiliency, and that value is maximized for the company. But it just isn’t possible to achieve the levels of organization and collaboration necessary to collect all the data from suppliers, 3rd party data providers and internal business processes to give buyers a complete picture of each supplier across the supply chain without a serious database and supporting processes. To get started and keep the process more manageable, many companies focus on a smaller subset of key suppliers.
Source-to-Pay technology can help procurement teams establish and organize campaigns to collect & update supplier information and receive real-time supplier risk management updates on important risk factors (e.g. Financial, etc.). Furthermore, these solutions can help procurement collect feedback from stakeholders, track and maintain certifications and more. With this information, procurement can rapidly identify and classify issues and then collaboratively work with suppliers on improvement plans.
One of the benefits that effective supplier development programs have in common is they establish mutually beneficial partnerships between the supplier and buying company. These programs enable bilateral feedback, opportunities for product and service innovation, access to new markets and investment. The key to the success of these strategies begins with communication and transparency, both of which are also essential in times of crisis. Additionally, manufacturers with mature supplier development strategies in place tend to have:
Access to reliable data,
The ability to identify critical suppliers across all tiers of the supply chain,
Capabilities to monitor and manage supplier risk and performance,
The ability to closely collaborate with the supplier, often including commercial, operational and technical strategies and plans.
Accomplishing and maintaining each of these elements over time is often a challenge for all but the most mature procurement organizations, but it is never too soon to lay the foundation. Source-to-Pay technology can help procurement lay the foundation, by fostering communication, collaboration and better visibility across the global supply chain.
Supply Chain Resilience and Agility
Due to the COVID-19 pandemic, the world is now painfully aware that even the best run supply chains can encounter significant challenges. However, some supply chains will recover faster than others because of their resilience and agility. What the best performing supply chains most likely have in common is a procurement organization with a strong data foundation to support effective decision making, the ability to collaborate and communicate with and support all tiers of their supply chain, monitor and track risk and performance and effective supplier management and development strategies that has produced close partnerships.
Throughout each of the elements described in this article, Source-to-Pay technology replaces much of the manual, non-strategic effort necessary to support and manage supplier relationships. The result is a foundation that empowers procurement teams to add more value to the organization and be better prepared to manage their supply chain through times of crisis.
Companies ‘spy’ on remote employees using tracking software. Great for productivity? Or a massive invasion of privacy?
Covid restrictions are starting to ease, and soon the global workforce will swap their comfy sweats for a morning commute.
It won’t happen overnight, however.
Leaders like UK Prime Minister Boris Johnson want people to stay spread out, staggering shifts and working remotely where possible.
And some companies may even adapt policies to give employees the option of permanently working from home.
That leaves managers with the task of keeping staff productive from afar.
There are all kinds of ways this can be done, but one method stands out for its rising popularity (and sheer invasiveness): tracking software.
Here’s a look at what the software does, why companies use it, and its effectiveness.
Staff tracking software gives employers the ability to keep close tabs on employee.
Features vary, but this kind of software lets companies track everything a staff member does on a company computer.
This ranges from recording all websites visited, to taking screenshots every few minutes and sending them back to the boss.
Virtual monitoring isn’t anything new; IT and HR teams have used such tools for years. What’s new is the huge uptake in surveillance software subscriptions since the pandemic started.
In fact, one surveillance software company, Hubstaff, saw a 95% increase in new customers in March over February.
Is it overkill to record everything an employee does?
Not at all, says Courtney Cavey, Hubstaff’s Marketing Director. In fact, she welcomes being monitored with Hubstaff’s own software.
“The freedom it ultimately grants is priceless,” Cavey says. “[My boss] knows I’m working when I say I am because he can see that I’m tracking time and activity levels, and completing tasks, so he doesn’t have to look over my shoulder and constantly ask for updates.”
It’s certainly one way to make sure staff are productive. But it isn’t the only way.
Trust over anxiety
With all the other productivity tools for remote teams, including Slack and Zoom, why is surveillance software so popular?
It’s all about control, according to executive consultant Lloyd Bashkin.
“It’s perfectly understandable that CEOs will feel anxious at a time like this,” he says.
“[I]t’s a basic human need to want to feel a certain amount of control, and when that is stripped away, bingo – anxiety spikes.
“So rather than see [computer surveillance] as paranoia, for most CEOs it’s just a natural inclination to feel a certain amount of control.”
As CEO of management consultancy Lloyd Scott & Company, based in New Jersey, Bashkin says times of crisis only intensify a person’s leadership style.
“The perception of inescapable fear, such as COVID-19, will amplify a CEO’s behaviour – so untrusting CEOs become less trusting (as a way to relieve anxiety) and more mature, trusting CEOs become more trusting,” he says.
Loosening the reins
As an example, Bashkin points to a recent client – a CEO who clashed with his head of procurement.
The CEO had a long running dispute with the head of procurement, accusing him of having a negative attitude and of letting quality slip. Then the pandemic hit and remote working only made the conflict worse.
The CEO’s solution was to monitor the head’s computer activity closely. If that didn’t work, he’d simply fire him.
Luckily, a conversation with Bashkin helped the CEO realise the problem was his own trust issues. So the CEO gave the head of procurement more freedom to do his job without interference, and the problems disappeared almost overnight.
Output over input
That’s because staff realise when they aren’t trusted by their manager, and close monitoring can be demotivating.
“If employees feel their manager is looking over their shoulder at every moment, trust goes out the window immediately,” says Corporate Rebels’ Pim de Morree.
He thinks surveillance software is ‘micro-management gone wild.’
“Apparently, employers don’t feel the staff they hired are capable of doing a job without them tracking their activities,” he says. “It’s the workplace equivalent of a prisoner’s ankle bracelet.”
Instead of focusing on how work gets done, he says the real measure of productivity is whatgets done.
“Figuring out how to measure that is the real problem to solve,” de Moree says.
However, not all surveillance stems from mistrust or control issues.
There are vital reasons for monitoring staff computer use, like protecting networks from malware or other viruses.
In fact, some companies are required to track employee activities to meet legal obligations. The key to doing it well is transparency.
Employers should let employees know what information they collect and why, says Ashwin Krishnan, tech ethicist and COO of UberKnowledge.
He advises companies to explain staff monitoring “not in legalese terms, but in actual terms of what this means for [the employee].”
“When employees can see the full extent of the responsibility and diligence shown by leaders, it breeds trust,” says Krishnan.
That said, it takes more than transparency to increase productivity, Krishnan says.
Remote staff are far more productive when they feel supported – especially in these unusual times.
“Suddenly, the employee’s home life needs to become part of the manager’s discovery process,” he says.
“Not every employee may be willing to share this but letting them know that they have a supportive ear if they need it is crucial. [A]dapting previously scheduled work meetings (adjust timing, duration, frequency) to deal with this at-home reality shows empathy.”
Such empathy can also help customers be more patient with a company’s employees.
Kristy Knichel, CEO of Knichel Logistics, a shipping logistics company in Pennsylvania, recently wrote to customers explaining her team’s new work situation.
Many of her staff are working remotely for the first time, and some even need company internet hotspots since they don’t have Wi-Fi at home.
“We understand that our employees are accustomed to the ease of communicating with one another in person in the office, so this has been quite a change to adjust to,” she writes.
“[O]ur team has made the transition smoothly and we hope that you have not experienced any disruption.”
Destination, not the journey
It isn’t easy to manage a remote team – especially during a pandemic.
It requires trust and empathy, while letting go of the need to control every employee move.
That’s why the best way to improve productivity is following de Morree’s advice and focus on what an employee delivers – whether in the office or not – instead of how they delivered it.
Want to keep up with the latest coronavirus and supply chain news? Join our exclusive Supply Chain Crisis: Covid-19 group. We’ve gathered together the world’s foremost experts on all things supply chain, risk, business and people, and we’ll be presenting their insights and daily industry-relevant news in a content series via the group. You’ll also have the support of thousands of your procurement peers, world-wide. We’re stronger together. Join us now.
Being swept off your feet by a new partner is something most of us have experienced – but how do you know that you’ve found the perfect match when it comes to your tech solution?
Choosing a new tech solution isn’t a task you do every day. It’s no doubt something that you’ve considered for a while. You’ve attended all the conferences, read all of the analyst’s reviews, talked to your peers, and dreamed about what life would be like with your new tech. You’re keen to modernise; to give your organisation the functionality that it needs. And with so many solutions out there, surely it won’t be hard to find the one that’s right for you.
But finding that perfect match is not as easy as it seems. All the solutions can start to look the same after a while and you are looking for more than just a pretty face. You are looking for a long-term relationship that could last for half a decade or more. Get it right and it’s a match made in heaven; get it wrong and you could have a major tech fail on your hands.
So how can you navigate that selection process and find yourself a tech solution that’s a perfect match?
1. Don’t Settle
Finding your right partner should be based on thinking about what’s right for you. Be careful of jumping in too fast just because you heard your preferred solution worked for someone else. Go deeper and look for solutions that address your industry’s biggest challenges. Also identify what makes your organisation unique and make sure your new tech addresses your organisation’s uniqueness.
This is even more important today due to the cloud. You see, in the past, on-premises software could be customised to do almost anything you needed it to, as long as you had the time, money, and resources to get it done. When you find gaps in cloud-based solutions, you have to apply for a feature request and hope they prioritise your request or end up having to settle for an inferior solution.
This is why identifying those gaps up front before you finalise your selection is so important. This is a primary reason on why we are such big proponents of our clients completing a Phase 0 (or a Success Blueprint as we call it) prior to making their final selection if they consider their environment complex.
You can also start to narrow down your list by looking at solutions that are going deep and specialising in your industry. You may also start by using tools like the Gartner magic quadrant to focus your search to the “Leaders.” Then go beyond that initial approach to refine your search.
Think about what the new world’s going to be like with your perfect match tech provider, but don’t settle until you find the solution that is right for you.
2. Questions are your ally
If you’ve ever been approached by a tech solution provider, or engaged them as part of a software selection, you’re sure to have experienced the full ‘sales pitch’ approach: tales of brand-new, cutting-edge software that is designed to solve any and every problem; presentations filled with all that sales speak.
Make sure you don’t fall prey to traditional “sales speak” and you seek the underlying truth. The only way you will find what that truth is, is by asking the right questions. We go in greater detail on the top 5 most common and what questions you can ask to find the truth in our Major Tech Fails, sales speak blog and podcast.
When looking at new tech solutions, there’s no such thing as a silly question. When you start, go in armed with a list of questions with a score card that you can use for each vendor. It is important to follow a proven process to evaluate each vendor so they are treated fairly and asked the same questions. You will know you have the right questions if key points of differentiation between vendors are identified and called out.
3. Are you compatible?
Unless you are starting a business from scratch or taking a scorched-earth approach to tech solutions, you are going to have legacy systems that will need to be integrated with the new one. Don’t think that starting a new life with your perfect match tech solution is going to be easy. Compatibility will be something you need to work on.
At RiseNow we take a systematic approach to identifying compatibility risks so that the challenges, use cases, resources, level of effort, timelines, etc. are known up front before the implementation project starts to eliminate any potential surprises. As we see, these surprises are what typically cause projects to go over budget, not finish on time and miss expected results.
But these surprises can be avoided. For example, we had a client a couple years ago that was in search of a new S2P system. They were in talks with all the typical S2P system providers, but they knew their issues were bigger than what technology alone could solve. They were not sure how best to address these, but were willing to engage us prior to the implementation kick-off to resolve those issues so they didn’t become problems during the project. We did just that which allowed us to finish the implementation in 7 months and deliver on the key success criteria that got the project approved. Had we skipped their engagement before the project, I am certain the project would have gone over budget, not finished on time and would have missed the objectives.
Are you seeing a pattern now?
4. Beware of the people pleasers
If something looks and sounds too good to be true, it usually is. When a tech solution provider tells you that their system does everything you want and more, it should give you pause. The people pleasers are after your business and some will say almost anything they think will work to convince you.
No tech solution will be 100% perfect. Perfect would be someone willing to say no to you, but also willing to work with you to minimise the no’s, identify viable alternatives or solutions that work for you, and focus on ways to maximise your value, especially in this economic climate. You see, there is no magic bullet when it comes to tech solutions, so if someone comes offering one, you are probably better off looking elsewhere.
If not, we have seen organisations forced to settle and then trade off functionality and adoption of suppliers/end users because it is now too late to reconsider. No one has an unlimited budget for tech and, like all relationships, there’s going to need to be some give and take.
5. In for the long haul?
Finally, the key part to finding a perfect partner is knowing they are willing to go the distance with you and they’re in it for the long haul. For procurement tech, a partnership could be anywhere from 2 years to 10, so it’s critical that the tech partner also sees the relationship in the same way as you do. We call this “organisational alignment.” Do their values align with yours? Are they looking for a sale, or do they truly want to partner with you? How committed are they to your industry? Do you have access to their executive team in case you run into problems?
Are they willing to put in the work to make the partnership a success? Will they be open to questions, discussions and problem-solving to build to success? If you and your team feel aligned, then your perfect partner may be closer than you think.
If you’re looking for the perfect partner in tech, there are plenty of pitfalls to avoid. Not every supplier is going to be right for you and it might take some time to find the perfect match for your business.
The good news is that there are tech suppliers who want the same thing: a successful tech implementation set up to succeed and not to fail, by being clear what you want from the outset, asking the right questions and being open minded to improving your processes when required to better fit your perfect tech match.
Got major procurement issues in your organisation? You may well be able to use technology and automated procurement to solve them.
The procurement process is much more complex than it looks. The more complex it is, the higher the number of issues. An automated procurement process can help you prevent and resolve these issues. However, many companies still rely on a manual process.
Let’s understand the challenges of the traditional procurement process and the ways automation can help.
Challenges of Traditional Procurement Process
A company practicing traditional procurement process faces a lot of challenges. Here are some of the major challenges of a traditional approach:
1. It’s Time Consuming
A traditional procurement process consumes a lot of time of both vendors and companies. As a result, it slows down the entire process and affects productivity. In addition to this, it can take days to communicate a single message and get the job done.
2. Chances of Duplication and Fraud
In a traditional procurement process, everything happens on paper so it becomes difficult for your team to keep track of everything. That’s why there’s little to no transparency in the dealings. This can lead to malpractice such as duplication of contracts or fraud. A single incident of fraud can affect your company’s reputation.
3. Inefficient Data Management
An offline procurement process involves a lot of paperwork, so data management becomes challenging. In addition to that, it also increases the risk of errors. In spite of this, 54% of companies are still using a paper-based invoice process.
Paper-based records are always vulnerable to tampering or loss of information and data. This can put your company in a troublesome position.
Benefits of Using Automated Procurement Process
Here are some important benefits of using an automated procurement process:
1. Improves Efficiency and Speed of Procurement Process
By automating your procurement process, you can not only speed up the process but also increase efficiency. This helps your procurement team by saving a lot of their time for other important tasks.
With an automated process, you can automate all the repetitive tasks. This helps you cut down on the amount of manual work for your team. It allows them to handle much more important and complex tasks.
2. Creates a Centralised System
As mentioned above, a traditional procurement process can lead to duplication and fraud in contracts. For any company, there’s nothing scarier than this.
However, automation can help you minimize instances of duplication and fraud. It helps you create a centralized system for all of your data and documents. This allows your procurement team to easily track down the required documents.
3. Reduce Manual Errors
Unlike a traditional approach, automation eliminates paper-based documentation and decreases the risk of errors. When you follow a traditional approach, it not only consumes a lot of time but also invites risk.
So, it’s best to automate your procurement process and encourage a paperless process to reduce manual errors. It also allows you to store information and data easily and safely.
Do you want to learn more about issues in the procurement process and how automation can help you fix them? If so, check out this infographic from PurchaseControl.
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:
Accounting-oriented data not aligned with procurement categorisation
Maverick and unmanaged spend not captured in the solution
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:
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.