A little innovation never hurt anyone. But whilst Maverick Spend may cause us to re-evaluate our processes, it can wreak havoc and cause long-lasting damage. Georg Roesch outlines 5 ways you can prevent it from happening and keep it under control.
Being a maverick isn’t all bad. Just look at Steve Jobs and Sir Richard Branson. Their outside-the-box ideas drove innovation and resulted in enormous successes. But for companies trying to manage spend (and let’s be honest, who isn’t?) rules-are-meant-to-be-broken behaviors such as maverick spend can wreak havoc on processes and, ultimately, your company’s bottom line. The upside is that it creates opportunities for procurement managers to re-evaluate processes, identify shortfalls and tighten spend gaps. But if left unchecked, it can – and will – end up costing your company money in the long run.
What is maverick spend?
Maverick spend is defined as buying from suppliers without following the company’s pre-established procurement policy. Purchasing goods or services out of contract or from non-preferred suppliers means that your company doesn’t benefit from the preferred supplier discounts that you worked hard to negotiate. Even worse, it can harm vendor relationships, affect future contract terms and open the door for underhanded business practices.
So why do employees “go rogue” and, more importantly, how can you stop it?
Here are five tips to maverick-proof your procurement processes.
1. Identify maverick spend.
Spend visibility is key. After all, you can’t save or fix what you can’t see. Do you know how much maverick spend costs your company? Or the work areas and spend categories where non-conformity occurs? A thorough spend analysis can help you identify gaps across all spend data sources. From there, you can pinpoint the who, what and where and put an action plan into place.
2. Determine why maverick spend occurs.
Most employees don’t “go rogue” on purpose or with ill intent. They simply may not understand the procurement process. Or they may find it cumbersome and time consuming. eProcurement software can be intimidating, especially to employees who don’t use it regularly. Or they may see better prices elsewhere, not understanding the costs associated with invoice and payment processing or expense reimbursement.
Whatever the reason, regular efforts to explain the “why” and share the value can go a long way in gaining buy-in. Consider hosting (bring your own) lunch and learn sessions, recognising outstanding department or individual accomplishments, and providing a forum for employees to recommend vendors and give feedback.
3. Review the entire procurement process.
If you find your procurement process difficult, simplify with a more user-friendly solution. There are a lot of affordable and easy-to-use automated eProcurement options on the market.
The key is to find a solution that’s easy to use and all-inclusive (one that sees all direct and indirect spend) that integrates with your enterprise resource planning (ERP) system. This ensures that all employees have access to the right information at the right time.
4. Hold people accountable for their expenses.
While creating processes is your job, spend management is everyone’s responsibility. Every manager in your organisation should know exactly what’s being spent in his or her area, who’s spending it, and how much spend occurs outside of contract or supplier network.
If you have a coupon at home for Papa John’s pizza, you’re probably not going to order Domino’s and pay full price. While this is a simplistic example, the same holds true at work. It just may be that employees don’t know what discounts exist or aren’t being held accountable for purchase price variances.
5. Close the gaps in your procurement process.
Additional measures to consider to reign in maverick spend include:
Limiting or eliminating P-card use to only certain vendors, merchant categories and / or dollar amounts. P-card usage can be difficult to monitor and measure which is why some companies are eliminating use altogether.
Limiting who can set up new vendors. Do you have a well-defined process for onboarding new suppliers? If not, you should.
C-level review of all non-contract or outside supplier network spend.
In the end, maverick spend and not playing by the procurement rules costs organizations BIG money. By digging deeper into the purchasing experience and the challenges and frustrations your employees encounter, you’ll better understand why maverick spend occurs, where it happens most often and, most importantly, what solutions you should implement to stop it.
Maverick spending is just one of the six challenges listed in our white paper on transparency in indirect spend. Read about the rest here.
What are the essential skills you need to possess or develop if you want to become one of tomorrow’s supply chain leaders? Is it enough to have a business-related degree and a little supply chain experience, or is supply chain leadership a vocation for which you must work hard to acquire specific qualities?Rob O’Byrne from The Logistics Bureau shares his expert advice.
In reality, it’s probably a little bit of both. Indeed, many elements of supply chain leadership can’t effectively be learned through academic channels alone.
In any case, an excellent place to start is by knowing what the most vital supply chain leaders’ skills are and, of course, why you need them.
That’s what you’ll find in this article, so you can check which essential skills you already have, and which ones you might wish to enhance with some pragmatic supply chain education.
These Are the 7 Supply Chain Leaders’ Skills You’ll Really Need
1. Information Technology and Automation Knowledge
Before getting into this first section proper, I want to make one essential point, which I’ll expand on later in this article. Supply chain leadership is all about people using technology as a tool. Nothing is more important than working on your people skills if you want to be a successful supply chain leader.
Nevertheless, few supply chains run successfully today without the support of sophisticated technology tools, like warehouse management and enterprise resource planning (ERP) systems. For that reason, you need at least a modicum of IT understanding to work in a supply chain environment, particularly if you intend holding a leadership position.
To be a supply chain leader, you will need to be familiar with the use of enterprise software applications like WMS, TMS, and ERP, not to mention analytics software, which is increasingly becoming a staple source of leadership decision support.
Enterprise IT Skills at User-level
There was a time when supply chain leaders could rely on subordinate employees to do the hands-on work with business information systems, and be content to receive reports and Excel spreadsheets containing data for decision-making.
Those days are gone, however. Today you’re expected to find your way around the modules of your company’s ERP and business intelligence applications on your own. Furthermore, your need for technology understanding extends beyond hands-on use.
Understand IT as a Buyer
As a supply chain leader, your input into IT procurement will be crucial, and you must know enough about your company’s technology needs to discuss them with vendors. You’ll need to understand the relationship between ERP workflows and physical processes, for instance, to help prevent classic mistakes from being made, such as applying new technology to outdated, inefficient processes.
It will help if you know automation technology, too, since more and more companies are applying automation in distribution centres and warehouses.
Ultimately, strong interpersonal skills still trump technological expertise as a supply chain leader’s forte. However, a career at the head of your company’s supply chain is not one to consider if you don’t have some affinity for technology and its application in business.
2. A Grasp of Economics and Market Dynamics
The supply chain world is changing rapidly and sometimes unpredictably, in line with the market dynamics across many industries, all of which are being affected by rapid shifts in customer and consumer buying-behaviour.
Many markets that used to be purely local or regional have become global, as have the supply chains that serve them. As a supply chain leader, you will need to focus on what lies ahead and, to some extent, predict it. That can only be possible with a thorough understanding of the market dynamics relating to your industry and your company.
Of course, each industry and the niches within them are subject to unique and specific market dynamics. Supply chain leaders can work in any industry as long as they know their stuff, but this does mean that a change of employer can require some in-depth study, especially if the market is unfamiliar.
As a basis to quickly adjust to supply chain career moves, it will help a lot to be familiar with economics’ basic concepts.
To see ahead and lead a supply chain team effectively, you’ll need to understand what drives demand, supply, and pricing for the goods and services provided by your organisation and its competitors. These forces impact a variety of supply chain management elements, including the cost of goods sold and the cost to serve your company’s customers.
3. Understanding Cost-to-serve
Supply chain leaders play a very active role in the profitability of their employing companies. If you’re running a supply chain operation, your decisions impact the costs involved in supplying your organisation’s customers.
You will have a huge advantage and the potential to shine as a leader if you can quantify how your supply chain leadership decisions affect your bottom line. For instance, too few companies focus on the real costs involved with serving customers.
The result of this inattention is often a one-size-fits-all approach to service, inevitably leading to the over-servicing of some customers and the under-servicing of others. A single service offering can even impair profitability, perhaps creating a situation where logistics costs cause some sales to generate losses instead of profits.
If you understand the cost-to-serve concept and can apply it to your company’s supply chain activity, you’ll be able to identify unprofitable customers and products.
By developing a thorough cost-to-serve understanding, you’ll even be able to make decisions that improve the profitability of those customers and products instead of taking knee-jerk measures to cut losses.
Every company wants supply chain leaders who can make direct and positive impacts on the bottom line—but not every company has such leaders. That’s why familiarity with cost-to-serve is one skill that can help you stand out as a competent supply chain professional.
4. The Skill of Flexibility
The one thing you won’t find on this list of supply chain leaders’ “must-have” skills is innovation. You don’t have to be an innovator to be an outstanding supply chain leader, but you do have to support and drive innovation. Flexibility is the skill that will help you to do that.
Flexibility gives you the ability to let others do the innovative thinking. Your flexibility will give those creative thinkers the confidence to present their ideas, since they know that you will adopt them if it makes sense to do so.
Flexibility will keep you from feeling too comfortable in the status quo ever to let it go. Flexibility will ensure that change (often termed the only constant in supply chain management) will not faze you or cause you undue stress. In turn, your team will be encouraged to embrace, rather than resist, change.
Flexibility is one of the soft skills that differentiate successful supply chain leaders. That’s not only because of the changing nature of supply chain operations, but also because things don’t always go to plan—far from it if truth be told.
For example, during supply chain improvement projects, it’s not uncommon for things to crop up, requiring plans to be changed. An inflexible leader may doggedly try to drive through with the original strategy, becoming ever more frustrated in the process and hampering, rather than helping the situation.
Inflexibility often manifests in the belief that changing a plan is an admission of poor planning, but in many cases, that is an erroneous presumption.
Don’t fall into this trap. Work on your flexibility as a leader. Accept that plans should always be work-in-progress, and adapt your approach when required. You can’t plan for every eventuality, and while flexibility is a virtue for supply chain leaders in general, it’s an absolute essential in project management.
5. Project Management Skills
Aside from flexibility, there are many other project-management skills that you’ll need as a supply chain leader. Of course, a lot depends on what leadership role you are in, but if you are headed to the top, you’ll probably hold several management positions on the way up, most of which will see you leading projects from time to time.
If you make it to the C-suite or, indeed, to any senior leadership position, it will help you and your managers do a better job if you understand the fundamental principles, pitfalls, and challenges inherent in project management.
The most crucial project management skills to acquire as a supply chain leader are as follows:
The ability to negotiate successfully for resources, budgets, and schedules
A high degree of personal organisation
A proactive approach to risk management
Of course, the above-noted skills are also valuable for supply chain leaders generally, not just as part of a project-management skill set. I’ve simply noted them here because they are the carry-over skills most likely required in a supply chain leadership role. To elaborate:
Personal organisation will be vital for keeping track of numerous projects for which you are likely to be a sponsor and meeting your obligations toward them.
You may sometimes be called upon to support project business cases, hence the need for negotiation skills.
When deciding if you’ll approve a requested project, knowledge of risk management will help you ask the right questions about the proposal and business case.
6. The Ability to Get the Best from People
So how about those people skills I briefly mentioned earlier?
I can’t put it any more plainly: the ability to lead, manage, influence, and inspire other people is the number one fundamental, essential skill that all supply chain leaders and managers should possess.
It is entirely possible to learn the necessary skills, but a word of caution is due. If you don’t enjoy team building and developing professional relationships with lots—and I do mean lots—of other people, don’t choose a supply chain leadership career.
On the other hand, if you love working with people but just don’t see yourself as a great leader, you probably have exactly the right mindset to succeed in a supply chain leader’s role.
There is nothing wrong with being self-critical, as long as you have the will to learn what you need to learn, and the energy to commit to your personal development. Being passionate about teamwork and enjoying interactions with others is half the battle in succeeding as a supply chain leader.
The 3 Cs of Supply Chain Leadership
Communication: First and foremost, you need to communicate well … to articulate sometimes complex concepts in a way that anyone within your company can understand, regardless of whether they have supply chain knowledge or not.
Dependent on whether your company operates internationally, you might benefit from communication skills that extend beyond your native language. It’s becoming ever more common for enterprises to give preference to bilingual or multilingual leadership candidates.
Collaboration: Secondly, you will need to be able to foster collaboration, a critical element in any modern supply chain.
It won’t always be easy, because sometimes you’ll be asking teams inside and outside of your business to collaborate and work together despite competing priorities and expectations. To ensure these parties collaborate, you’ll need to draw on communication, persuasion, and relationship building skills.
Change: Change management is another people skill in which you might wish to receive some special education or training. If you are planning to graduate from a role where you’ve been used to participating in, but not leading change efforts, experience alone may not be sufficient to help you take people through challenging changes. Resistance to change can be hard to overcome.
The impact of changes within your supply chain can affect employees on a very personal level. You’ll need to know how to empathise and to listen actively to what people are telling you. Without these skills, your leadership can quickly be rejected during periods of change, purely through fear of the unknown and a sense that you don’t appreciate employees’ concerns.
Get the Best From Yourself
Finally, while the need to interact effectively with other people might seem obvious, you shouldn’t neglect the development of the person most impacted by your skills and abilities—yourself.
Supply chain leaders should be able to conduct regular self-assessments and identify their areas of weakness.
We never stop learning and developing, but by having the ability to self-appraise your skills honestly, and work on those areas that need it, you can acquire new expertise at a rate that keeps pace with the ever-changing supply chain environment.
Getting the best from yourself also means having the ability to curb your ego. Learn to recognise when somebody else in your team exceeds your aptitude for a specific task or responsibility.
Let that individual take the lead, and be happy to follow and learn from her. Not only will that free you to play a part in which you can use your strengths, but you’ll also be empowering the other person and helping her to reach outside of her comfort zone.
7. The Know-How to Negotiate
As a modern supply chain leader, it won’t only be your reports and colleagues that you need to interact with effectively and skillfully, but also those outside your organization. Moreover, both internal and external interactions will often involve the need to negotiate.
Supply chain leaders must negotiate often, and even if you’re not doing so on a one-to-one basis, you’ll probably find yourself in scenarios where you’re part of a team of people trying to broker a deal or arrangement.
Negotiation Scenarios for Supply Chain Leaders
Some examples of possible negotiation situations that you might get involved in, and in many cases, lead, include:
Procurement of IT services and solutions
Contracts for logistics services
Brokering deals with product vendors (for direct or indirect supplies)
Putting together contracts or service level agreements with customers
Negotiations with employee groups or trade unions
Business merger/acquisition negotiations
Why do Negotiation Skills Matter?
Negotiations are typically transactional, but often take place between entities or teams engaged in long-term business relationships. Whether you are the lead or a mere participant in the negotiation, your skills will influence the transaction’s outcome and the trajectory of the broader relationship.
It’s easy to make mistakes during negotiations, but with relevant training and education, you can hone your skills to avoid some of the most common errors.
For example, skilled negotiators know that the process does not have winners or losers. They don’t go into a negotiation aiming to win as many concessions as possible, and they don’t feel that they have failed when they have to give ground to arrive at a settlement.
A win/lose type of attitude will lead to negotiating mistakes. Even if you come out of a negotiation feeling that you have won, you might find further down the line that your “win” has done nothing to strengthen what might be a vital partnership.
Mistakes that Skilled Negotiators Avoid
If you have developed your negotiation skills, you will always enter into discussions looking for an outcome that will satisfy both parties. You’ll also be able to avoid other common mistakes such as:
Failing to prepare by identifying what the deal-breakers are, which outcomes are essential, which ones are useful to achieve, and which ones don’t matter in any concrete way.
Asking only for as much as you expect… It is better to ask for more than you expect.
Modifying an offer you have made before getting a response to the original. It’s important to understand that the other party may use silence to bait you into relaxing your conditions.
Offering compromises before you have heard all the demands of the other party. By getting all the facts first, you can be selective in identifying where compromise may be possible.
Focusing too much on your party’s input and achievements. Strong negotiators pay close attention to the opposite party’s behaviours, ask plenty of questions, and take time to understand and analyse the answers.
How to Boost Your Supply Chain Leader’s Skills
Your business degree and/or hands-on experience in a supply chain role will undoubtedly help you gain and maintain a supply chain leader’s position in your current company—or in a new organisation if you should be planning a move.
However, supply chains have become so complicated that an extensive toolkit of required skills is required if you want to thrive and make a difference as a supply chain leader.
Some of the skills in that toolkit can be difficult to attain without many years of supply chain experience, simply because they are rarely taught outside of the workplace. Your best option might be a program of specialised supply chain and logistics education.
Our Supply Chain Secrets program, for example, was developed and designed by people who work in the industry. It can help you learn about each supply chain area pragmatically, using real-world problem-solving and relatable examples of commonly made mistakes—and methods to avoid them.
If you’ve read this blog post, perhaps you’ve been searching online for ways to enhance your supply chain leader’s skill set. If so, you don’t need to look much further. Join Supply Chain Secrets today, and access the skills you need to be a supply chain leader of tomorrow.
Here are three keys to conceiving, deploying and using technology to elevate the performance of your procurement process operations from IBM’s Chander Vashistha
Procurement organisations depend on technology to manage their source-to-pay (procurement) functions most efficiently and effectively. Technology also provides exceptional services experience to their requestors, buyers and suppliers. However, organisations often find the process of selecting, implementing and using technology platforms and applications challenging. While procurement technology provides many benefits, organisations that do not select the right technology, integrate the technology to create a connected ecosystem and create processes to use the technology often do not realise the full benefits.
Clarity is the cornerstone of successful procurement practices, and procurement technology must support and enable clarity between both parties. When organisations do not receive full value from technology systems, the issue often comes down to clarity. However, it’s essential that clarity exist before adding in the technology. Technology doesn’t create clarity, but improves and enhances clarity already present in the process.
Organisations with good clarity in their procurement practice see significant competitive advantages, business continuity, resilience and digital transformation. While these aspects are essential for a successful business, the COVID-19 pandemic and resulting business disruption significantly increases their importance.
Here are three keys to conceiving, deploying and using technology to elevate the performance of your procurement process operations:
1) Align the purchasing strategy with operations and vision
When organisations lay technology on top of disconnected strategy and vision, the new platforms and systems often magnify the misalignments. Before focusing on technology, organisations should review their current strategies to ensure alignment. A well-connected procurement strategy and vision drives implementation of a frictionless technology ecosystem rather than a patchwork collection of discrete point solutions.
The purchasing process works within both your procurement process and overall company operations. On an even more granular level, the purchasing strategy tightly connects with procurement operations’ vision and procurement operations strategy. Before making changes, especially in processes and technology, practitioners must step back and consider strategic alignment.
After understanding your organisation’s purchasing strategy, procurement vision and procurement operating strategy, the next step is ensuring they all align with one another. After making any necessary changes, your organization will have the foundation to begin looking for technology that supports all three.
2) Understand the four types of procurement technology
Procurement professionals often assume — incorrectly — that all procurement platforms and systems fall into a single category. By understanding the different types, organisations can ensure they are researching and purchasing the best type of technology for their needs. Without clear understanding of the different types of procurement technology, organisations may purchase multiple technologies performing very similar functions, which creates waste and redundancies, not to mention wastes funds.
Procurement organisations use the following four types of technology:
ERP software and blockchain equivalents – SAP-MM, SAP-FICO, TYS blockchain, IBM Temp labor blockchain and RSBN blockchain
Commodity or process-neutral procurement technology – SAP Ariba Solutions, Coupa, Tradeshift, Sourcematrix and IBM SpendIQ
Commodity or process-specific procurement technology – IBM Oniqua, SAP Concur, SAP Fieldglass, Amazon Business, Alibaba 1688, Uber for Business, Service Now and JIRA
Cognitive e-procurement applications with intelligent workflow platforms – IBM Procurement Service Desk, IBM Watson Virtual Buying Assistant, IBM B2B Marketplace and IBM Direct Spend IQ
Organisations often invest in one or two types of procurement technology, which does not typically enable achieving their procurement strategy and vision. Often these organisations assume they fell short due to the technology implemented. By deploying relevant technology from each of the four types, organisations achieve the clarity needed to meet their goals.
3) Focus on cognitive e-procurement applications
Organisations find a wide range of choices in technologies, especially in cognitive e-procurement applications, which use artificial intelligence to open procurement transformation processes. This type of technology helps organizations transform the procurement process experience for buyers in direct, indirect, MRO and capital purchasing.
Because cognitive e-procurement applications are relatively new and come with a large amount of hype and innovation, organisations should fully understand what features they need as well as the features offered by each solution. By selecting the right application for your specific needs instead of the most feature-rich product, you’ll significantly increase your ROI and strategy improvements.
For example, Trust Your Supplier blockchain, which came to market in 2019, helps procurement professionals automate and digitize supplier information like a “digital passport.” The application also provides the immutability and trust that comes with processing transactions through blockchain. Because the application shifts the process out of procurement operations, the technology reduces cycle time, lowers transaction costs and improves reliability of supplier information management operations. Additionally, suppliers streamline their process by only submitting information to a customer once and can share the same information to other customers using a digital key for record access.
Making the move to integrate technology
As organisations continue to manage change and disruption due to the pandemic, creating clarity in your procurement cycle remains a high priority. Through using cognitive technology driven by intelligent workflow platforms, in conjunction with the three other types of technologies, organisations can create the most effective and efficient processes that drive business value. By aligning strategies, understanding the types of technology and implementing cognitive e-procurement applications inclusive of the technology ecosystem, organisations can improve performance, maturity and outcomes.
Procurement has seen some revolutionary changes over the last two and a half decades. From manual processes to powerful P2P Suites, there is no denying that procurement is becoming more innovative and tech savvy. But as a whole procurement tends to lag behind other professions – it’s time to lead the way for innovation, but where do we go from here?
Technology is driving industry forward at an exponential rate, globally. It’s hard to think of an industry that hasn’t adopted a new technology, at least to some extent, in the last several years. Technological breakthroughs are changing the world over, both from a consumer perspective, but also from a business one. From smart phone companies using fingerprint scanning and facial recognition to car companies implementing park-assist, adaptive cruise control, and in some cases, even self-driving capabilities. This is truly a world driven by innovation, and most industries and business sectors are investing heavily to that end. But what is procurement doing to keep up?
Where We’ve Been
To answer that, first it is important to see how far the profession has come. Although it has taken longer than other markets – the progress has been remarkable.
· Manual Processes – Like most, this is what dominated the industry for a large period of time. Everything was done manually, from drawing up contracts, to sourcing and purchasing materials. This was quite a time-consuming process at a time when procurement lacked the complexity of today.
· Emails & Spreadsheets – As technology began to become more mainstream the manual communications started to give way to emails, no longer requiring procurement professionals to travel onsite as often. The use of spreadsheets began to build the framework of an organizational system with excel becoming the main database of choice for many in procurement.
· ERPs – Enterprise resource planning (ERP) is a software that handles business process management it allows an organization to use a series of integrated applications to control and automate many functions related to technology, services and human resources. This is one of the most widely adopted pieces of technology used in procurement today.
· S2P Systems – This is the current cutting-edge procurement technology. A good S2P suite can bring cost savings, efficiencies and data visibility to your business. Our source-to-pay (S2P) platform, JAGGAER ONE, is a comprehensive suite that automates, optimizes and provides insights across the source-to-pay spectrum. Integrating seamlessly with your ERP, JAGGAER ONE can provide data transparency and visibility, while giving access to a powerful suite of end-to-end supply chain and sourcing solutions.
Procurement is at a Cross-Roads
Procurement has long been a cost-focused profession, largely relying on siloed processes and teams, taking a reactive and tactical approach. And, at one time, that was all that procurement needed to do. But it is now time for procurement to move into a new role – one that takes charge of the business and leads the way, becoming an integral part of the overall business strategy.
I believe that procurement professionals around the world stand on the threshold of a new age. The old paradigm of cost reduction, being reactive and only focusing on purchasing is drawing to a close. In this dynamic, complex and disruptive era, procurement leaders and experts the world over are searching for a secure, successful future.
With technology like artificial intelligence (AI) and robotic process automation (RPA) becoming more mainstream, the applications for procurement are virtually limitless. Technology like JAGGAER’s Smart Assistant, which is powered by AI, is one such possibility. This conversational platform designed for procurement is a powerful tool, which will eliminate much of the tedious and manual processes that still plague the procurement profession today. AI will be a driving factor in the development of the procurement profession.
Where We’re Going
The result of all these technological advances in several years’ time will be autonomous procurement. As I’ve written in a previous blog “autonomous procurement is a platform with embedded intelligence, but a system that also continues to build on those capabilities to automate the full source to pay process without human interaction. However, this will happen only in instances where human input isn’t necessary or desired, such as repetitive or time-consuming tasks”.
It is incredibly important to remember that autonomous procurement is not meant to eliminate human input or the role of procurement professionals. The end goal here is to augment people, freeing up time to focus on value adding tasks and strategic thinking. Human insight is crucial in business – but this is all about using technology to eliminate mistakes, monotony and cut out repetitive patterns. The future platform will assist you at every step of the source-to-pay process and over time it will manage more & more complex activities autonomously, so we can focus on doing strategic analysis to unlock new opportunities.
The procurement leaders of the future will need to combine strategic thinking, along with an analytical mindset. Leaders are crucial in today’s times, especially with the rise of AI, algorithms and automation. In order to stay ahead of the curve procurement professionals will have to evolve – becoming more data-driven and strategic, because that is something that will always require a human touch.
Prior to the pandemic, a “just in time” inventory management strategy worked wonderfully well for most supply chains, but “just in time is only able to respond to certain fluctuations,” Takshay said.
When the pandemic drove large-scale disruption, the strategy unravelled. Retailers, for example, were left with empty shelves, late deliveries, and no warning about shipping delays.
And it wasn’t just retail. Industries across the board lacked critical products because companies didn’t have visibility into their tier 2 to tier 10 suppliers – where 40% of supply chain disruptions occur.
Suddenly, companies were scrambling to change supply strategies.
“The companies who have started on transformation journeys before COVID have fared much better,” Takshay said.
In fact, IBM’s visibility of its own internal supply chain meant it could predict the supply chain impact from the pandemic much sooner than most.
Path to resilience
So how do you get that same level of visibility and resiliency across your supply chain?
It starts by asking the right question.
“[People should be asking] ‘what kind of supply chain do I need to have?’” Takshay said.
That’s why the smart companies are re-balancing their risk appetite.
A real control tower
A resilient supply chain is a transparent supply chain. And the only way to get that crucial visibility is having a smart control tower.
The concept of a control tower isn’t new. It’s a place to pool data from across your supply chain, and use it to make informed decisions.
The right tower helps you see problems a long way off, so you can minimise disruption and maximise profitability.
But Takshay noted a worrying trend in procurement where any sort of dashboard is called a “control tower”.
That’s a problem, since most inventory control towers are seriously limited. And you can’t make excellent decisions without knowing the full picture.
The result? You can make decisions with confidence, knowing you have all the external information you need.
Problem 3) Most tower controls can’t get into the nitty-gritty detail.
A crucial flaw in most control towers is they lack granular detail. That’s a pretty big issue when your job hinges on knowing the right details.
So instead of depending on people to enter the right data in the right place at just the right time, there’s a smarter way.
IBM’s control tower gives you the microscopic detail you need to make confident decisions.
Problem 4) Most tower controls are inflexible.
A major drawback for most inventory control towers is the rigid structure.
There’s only one way to input data, and don’t even dream of changing the architecture. But the pandemic showed us how fast everything can change and how flexible and agile your supply chain needs to be to respond effectively.
You need a control tower that can keep up with the reality of supply chains today. That’s why the IBM Sterling Supply Chain Control Tower is ideal. It adapts to fit your business needs – no matter how quickly they change.
Problem 5) Most control towers predict the future based on past events.
If you don’t have real-time visibility across your supply chain, you are making decisions based on past events, Takshay said.
At the very least, a control tower should give you current information. But IBM takes it a step further with predictive capabilities.
The control tower looks for patterns in your data – flagging possible issues before they happen. That way, you can quickly adapt and avoid disruption.
Don’t wait for perfection
Control towers go a long way toward visibility and resiliency, but they aren’t a silver bullet, Takshay said.
So instead of waiting for perfection, start bringing your systems together now.
“The more visibility and the more integration, the more resilience,” Takshay said. “You’re able to bounce back much faster.”
If you want greater supply chain resiliency, you need greater visibility.
And you’ll get that level of visibility if you choose a control tower that actually gives you control.
In times like these, all systems need to be firing on all cylinders, so how can you tell if your system is beginning to show it’s in need of optimization or replacement? There are 5 telltale signs that suggest your tech is failing.
The digital age marches on and it’s rare to find an organization that has not automated some or all of their procurement operation. The business case for going digital in S2P is compelling, so it is critical that it works.
Yet many organizations have tech solutions in place that no longer fit their intended purposes. Worse still, many have just given up and are settling for an inferior system that is not meeting their needs.
The signs are there, but they are either going unnoticed or they are being ignored. Both situations are perilous and without swift action, the cost to an organization in time and resources – and the immediate need for a new solution or an optimization – can really mount up.
What are the key signs that your tech solution is failing?
And how do you recognize them before it’s too late?
Here are some of the most common.
1.User adoption is on the decline
Your tech may have been heralded as the solution to all your organization’s ills. And for a while it was exactly that. But now even the staunchest champions of the solution are withdrawing their support and end-users are finding ways to avoid using the system altogether.
End users are reverting back to picking up the phone to place orders or finding other ways to go around the system. This will result in more spend going through P-Cards without prior approval and/or more invoices showing up that are not tied to a PO.
Decreasing adoption is one of the key signs that your tech is failing, and that action needs to be taken. Once users are working around the system, any efficiencies the solution offered are being lost. And it’s probably costing you more to keep things running.
Close communication with end-users is a good way to track ongoing performance and opportunities for optimization.
2.High end-user support rate
Your end-users will also be able to tell you when the solution is failing when it comes to usability. A clear sign will be when the rate of users seeking system support begins to increase and where tasks become increasingly difficult to perform. Especially with your more infrequent users of the platform.
When this happens support tickets will increase and if they are not resolved quickly, end users will lose confidence. When that happens, tickets may decline, but not for reasons that are good. as end users will typically turn to work arounds.
The most common work around is sending requests via Free Form requests to the buyers to complete for them. If your buyers are spending more than half of their day chasing down requisitions, you have a problem that needs to be corrected.
The second most common work around is the use of a “Power User.” This is when departments or locations turn to one person to complete all of their requests on their behalf. This was common in the days of ERP requisitioning systems, but not today. Especially when P2P systems of today have user interfaces that resemble what they have at home.
If any of these work arounds are happening, your tech may have seen better days and has become dated and too cumbersome to work with.
Communication with end-users is key again here. You want to be able to have a continuous feedback cycle to raise issues before they start impacting operations. It will help to identify any bugs to be fixed and create a forum for new feature requests. What you learn may surprise you.
Which brings us to the next telltale sign.
3.Lack of New Innovation
You’d expect your tech solution provider to be leading the pack in new features and improving your overall user experience to create even more value for your organization.
If you’re not seeing these, it is time to start asking questions of both your system administrator and your software provider.
Being a system administrator can be hard work, especially when there are 3 new releases per year to keep up with. If you are not seeing new features/functionality it may be that your system administrator is overwhelmed. Since new features come to you in the off position, you may have new features that have never been turned on.
If that is not the case, and your solution is not keeping up with other S2P providers, then it’s a clear sign that your provider’s focus is elsewhere or they built their platform on a system architecture that is difficult to develop new functionality.
Both situations should be a red flag to your organization. You should set the wheels in motion to optimize what you have or determine if it is time to test the market for a new tech solution.
4.ROI less than expected
Before you started out on this journey with your chosen provider, you created a detailed business case of what you expected in terms of outcomes from your new tech solution. You probably broke out the soft costs from the hard costs and knew what processes the tech would help to improve and how it would increase efficiencies in your organization.
These expected benefits – hard dollar savings, employee time, resources and removal of unnecessary or duplicated processes – could be quantified with a monetary value. This, in turn, allowed you to calculate your ROI.
However, as time has gone on, it’s become clear that the level of expected benefits isn’t being delivered. The ROI for the solution isn’t being met and it’s time to understand why. There could be a number of factors (including the items on this list). But all of this is a further sign that your tech solution is no longer fit for purpose.
5.Wandering solution roadmap
Even The Beatles had a ‘long and winding road’, but they at least knew the destination that awaited at the end.
Your technology journey may not have an end point by its very nature, but it should at least have clear direction. This would have been identified at the outset of your selection process, complete with clear goals and initiatives, helping to determine which technology solution would be selected.
Years later you may find that what was once their focus is no longer. Maybe you selected your tech provider due to their commitment to your industry or their commitment to a certain product road map. It is not uncommon for plans to change and for tech companies to change their focus for a variety of reasons. Is this enough reason to leave and start looking elsewhere? If it were up to me, that would depend on how many other items are on this list that are currently plaguing your operation as these issues may be related. If they have changed direction and are focusing on industries and organizations that don’t resemble you, it may be time to start looking elsewhere before things start getting worse.
Now you’ve seen the list, do you have any signs of your own to add? Anything in your organization that might now seem like a warning sign? These signs may not be immediately obvious which is why it is so important to know your KPI’s and be measuring what matters. If you don’t have anything in place, your solutions provider should be helping with this with a strong roadmap and support.
So keep these signs of a failing tech system in mind. You should then be able to avoid being encumbered with an ailing solution and instead remain as close to the cutting edge as you can.
Bringing it all together by bringing Intelligent Spend Management to the business.
If you’re just buying office supplies, you’ve probably got a good idea what you’re spending on paper and pens. But odds are your budget goes beyond a few reams of ultra-white printer stock. And while you are specifically tasked with procurement, you actually help hold the reins and hold influence on multiple categories of spend — from direct and indirect goods, to services, contingent labour — even T&E.
True, this spending is spread out across your organisation and, yes, in many of these categories, spending is more decentralised than ever with employees all over the company buying what they need when they need it. And, it’s true that all of this spending and all of these categories aren’t even in your charge.
However, the business needs you to help bring all that spend under control across all those categories, so you can not only reduce costs, but also help your company:
Manage supplier performance holistically
Diminish delivery and reputation risks across the board
Improve compliance and enforce purchasing policies equally in all categories
Increase productivity across procurement and throughout the entire company
Organisations are expecting this and more from procurement.
They want you to collaborate with finance and supply-chain leaders and address spend management across the business.
They’re expecting you to bring more spend categories under control, to unify how you manage suppliers across all categories, and to help bring direct and indirect spending together with services and T&E to increase visibility into all your spend.
They want more, and there’s an easy way to deliver and manage every source and every category of spend in delivering one, unified view.
Unfortunately, the systems most businesses use to manage all of these different spend processes can create barriers between spend categories and keep people from working together. Intelligent Spend Management, on the other hand, is a strategy designed to bring those barriers down, so you can get visibility into and control over each and every area of spend. In one place.
Why Intelligent Spend Management Matters
Intelligent Spend Management means comprehensive policy and supplier management. This gives you oversight over indirect and direct suppliers while bringing that same level of discipline to services/external workforce suppliers as well as key travel suppliers.
And, integrated with your ERP system, an Intelligent Spend Management solution creates a common set of spend data — a hub where you can unify and clarify the information. You’ll also be able to:
Capture and centralise once-invisible spend like p-card transactions, non-PO invoices and direct travel bookings that used to slip through the cracks in your systems
Apply sourcing best practices consistently to all of your suppliers across all categories
Centrally manage supplier risk as well as tax and other regulatory requirements
It brings you best-in-class control of each spend category. This means you can manage the entire procure-to-pay process for direct and indirect expenses from a single solution. Imagine being able to:
Deliver a guided user experience that makes it easy to follow policy
Give users a simple way to make procurement requests, plus tactical purchases directly from suppliers
Ensure the suppliers you source, the prices you negotiate and the terms you establish are pulled through right to the point of purchase, so policy compliance becomes everyday practice
Capture data from across the process and use AI and machine learning to automate mundane tasks and serve up insight-driven recommendations at critical decision points
Strengthen supplier relationships and, ultimately, get more innovation from suppliers to improve how you work and what you deliver
And you can bring that same level of precision, efficiency and user experience for services, your external workforce – and the same level of control.
Presenting a Unified View
You get a unified view of spend. The Intelligent Spend Management solution connects procurement spend data with data from across spend categories, giving you a single, near-real-time view — without having to piece together reports from disparate systems.
This means you, your friends in finance and your supply-chain peers can see where every bit of your budget is going, and help the organisation:
Ensure that all spending is in line with corporate policy and priorities
Get up-to-date views into your KPIs, so you can adapt accordingly
Manage discretionary employee spend before it gets away from you
Feed this spend data back into supplier management and fuel stronger negotiations
Intelligent Spend Management breaks down the silos, so companies can control spend across the board.
This is about procurement, but it isn’t simply for procurement. Intelligent Spend Management enables you to work across categories and bring all the data together — so you can bring confidence to your company by bringing certainty to your spending.
This article was written for Procurious by Drew Hofler, VP of Portfolio Marketing for SAP Ariba & SAP Fieldglass.
Requisitioning (or asking for what you need) is a key part of the procurement process. So why is it frequently sidelined in ERP discussions?
This article was first published on the Coupa Blog.
Having either implemented or worked with some of the major ERP systems on the market, I think I’m on safe ground when I say, nobody chooses to do requisitioning through their ERP system. They settle for it.
ERP systems are largely built for finance and the controllership. End users are often not taken into account. Their requisitioning modules are notoriously difficult to use, which is too bad because requisitioning is how most non-finance users — aka. everyone else in the company — will interact with the ERP system.
In fact, people putting in requisitions to get what they need to do their jobs represent a large segment of non-finance users feeding data into the ERP. If you burden them with a system they won’t use, or that they’ll use in a sloppy way, your ERP will have data quality issues. To avoid having to settle for ERP requisitioning, it’s to everyone’s benefit for procurement to be part of the ERP discussion, as a strong advocate for the end user.
Advocating for Procurement
I’m not saying that will be easy. As I’ve written previously, organisations need to think more broadly about their whole finance system, which comprises multiple interconnected processes, from sourcing to the point where something is paid for and entered into the record.
The ERP system addresses the back end, and it’s designed for finance to be able to do what they need to do regardless of how the data gets in there.
So, the discussion doesn’t usually extend to the front end—sourcing, contracts, approvals, requisitioning—which is where a lot of that data comes from, because the thinking doesn’t extend that far. It’s not easy to break down these silos.
In situations where I’ve been the advocate for the needs of procurement, I’ve had to fight pretty hard to get that perspective considered and I’ve often been the lone dissenter in the room.
You need to be a realist. There are always resource constraints, and there’s a hierarchy of needs within finance, and user-friendly requisitioning is never going to be at the top of the list. But when requisitioning is ranked seventh out of six fundable implementation projects, the potential for settling becomes very real. Hello, heavy ERP requisitioning module.
Map it out
One way to avoid that mistake is to map out the whole process, because it’s not completely linear. Data flows from one process into one, or several, others. A lot of times an ERP decision is made before these processes are mapped out. But, when you map it all out, it becomes obvious that quality and consistency of requisitioning is critical for getting finance all the data they need to make the ERP system a single source of truth.
Learn the language
The main requirement for a better-than-ERP experience is that the requisitioning system be user friendly. You can’t push a heavy ERP requisitioning system on a marketing associate fresh out of college, or on a seasonal retail worker.
But usability is one of those subjective, soft terms that may not always resonate with the finance audience. To advocate effectively, understand the needs of finance and speak their language. For example, if you’re talking to a controller who is a worldwide tax authority, framing it in terms of compliance and data quality is a much better approach.
You also need to break down what you mean by user friendly. Every ERP vendor is going to say their requisitioning module is user friendly. If no one is looking out for non-finance users, that box just gets checked.
How user friendly does it need to be? You’re probably expecting me to say, “It should be as easy to use as Amazon.” I would personally love it if it could be so, but there are different requirements for business buying that for consumer buying. But, it can be much easier than most ERP requisitioning modules make it.
A good system approaches requisitioning broadly. It’s not just asking people to fill out purchase orders. It should really be a way for an employee to get anything they need to do their job. In fact, I’d rather they didn’t have to even use the words ‘purchase order’ or ‘requisition.’ We’re simply helping them buy things.
Ideally, they should be able to click a bookmark, get to a portal and then get in through a single sign-in. They land on a homepage where they see relevant buying policies and have visibility into all of their transactions
There should be smart search capabilities, tailored towards a user who is probably somewhat resistant to using the system. They can’t get irrelevant results, or come up empty. They have to be able to quickly find what they want, or find out how to get it.
If it’s a catalogue item, the actual policy pops up, which will guide them how to buy it. If they need a new computer monitor, maybe it comes back and says, “OK, you have to log a ticket for IT because they do provisioning.” Or if nothing is there, it will guide them towards making a free form request. But they don’t even need to know these terms. All they need to know is what they want.
Heavy and Cluttered
In contrast, the requisitioning modules of the major ERP systems are often heavy. The home page may be cluttered with lots of finance information that’s not relevant. The email notifications can be complex and confusing.
There are a lot of fields to fill in so finance can get all the codes and data it needs – provided the would-be requisitioner doesn’t take one look at it, decide it would be faster just to run down to their local Staples store, and expense the darn thing. That’s the kind of thing that happens when you settle.
There are good reasons why requisitioning is not the top priority in the ERP discussion, but neither is it right for it to have no presence or priority. The real impact of user-friendly requisitioning is better data and better compliance.
To make sure your company doesn’t settle, somebody needs to advocate for all the people who aren’t in the room, but are going to have to use the system, and convince finance to give it the proper priority.
The ideal situation is that requisitioners don’t have to think about finance at all—or procurement for that matter. The irony is that to accomplish that, the folks in finance have to get together with procurement and think hard about requisitioning.