15/05/2018 23:51 | Share
As per yesterday’s post, figuring out your priority can be particularly painstaking because the maximum benefit is only realized when certain supporting systems are in the mix.
If we reverse our last post, you might well think that you need the following core modules to benefit from the indicated modules, and you might well be right.
|Spend Analysis||–>||Product Management, Category Management|
|e-Negotiation||–>||Spend Analysis, SSDO, Guided Buying|
|Contract Management||–>||Spend Analysis, Requirements Definition, Product Management|
|Catalog Management||–>||Supplier Management, e-Negotiation, Guided Buying|
|Purchase Order / Invoice Management||–>||SSDO, Guided Buying, Catalog Management, Supplier Management|
|Supplier Management||–>||Opportunity Analysis, e-Negotiation|
|Risk management||–>||Opportunity Analysis, Contract Management|
|Product Management||–>||Contract Management, Guided Buying|
But something interesting falls out of this. You don’t really need anything to get started on supplier management, and the only thing you need to benefit from e-Negotiation is a way to make use of the data (be it spend analysis, optimization, category-management based guided buying, etc.). And when you start on your supplier management journey, it’s supplier information management (followed by data-backed supplier performance management).
What does this tell us? The starting point is a (set of) solution(s) that helps you get your supply management master data under control. After that, the primary buying categories, the market, the internal situation, and a host of other factors will need to be balanced to select your next (set of) priority(ies), but without data, you’re not going anywhere.
15/05/2018 23:51 | Share
Supply Management Mastery is an elusive goal. As SI has been documenting for years, in order to master supply management, you have to manage a slew of Source to Pay processes as well as related Operational, Finance, and Risk processes.
But this is not easy when you consider the many steps involved in even source to pay. Spend Analysis. Opportunity Analysis. Requirements Definition. e-Negotiation. Strategic Sourcing Decision Optimization. Contract Negotiation Management. Catalog Creation. Guided Buying. Purchase Order Management. Invoice Management. Supplier Management. Risk Management. Product Management. And so on.
You have to master all of them, but you can’t work on them all at once. You have to make priorities, and eliminate all but the top three (3). And even then, you might not be able to tackle all three if each would require a separate system.
So what’s your priority?
Spend Analysis gives you insights, but you have to be able to act on them. That requires e-Negotiation, SSDO, contract management, etc.
Opportunity Analysis goes beyond just spend to determine if your opportunities are spend related, supply base related, process related, or otherwise.
Requirements Definition helps crystalize organizational needs and helps the buyer zero in on what really matters. But then it has to create good contracts and statements of work.
e-Negotiation helps capture all of the back-and-forth between both parties so that the organization can build supplier profiles and take advantage of that. Provided the organization has deep supplier master data management.
SSDO can find the optimal cost allocation across suppliers, products, and carriers and delivers an average savings year over year that exceeds 10%. But it requires deep models and lots of data. And where does that data come from? Typically from e-Negotiation.
Contract negotiation management is great for creating great contracts. But you need product details, SOWs, risk management and liability clauses, and other data.
Catalog management software is great, as long as you have a supplier management portal to manage the supplier the catalog comes from.
Guided buying is even better, but only if you have the solutions to guide the buyer to that captures the majority of organizational spend. Guided buying that only works in an incomplete catalog is more of a frustration than a solution.
Purchase Order Management can eliminate a lot of paper, provided there are catalog, sourcing, etc. systems to integrate with to auto-generate those POs on buyer actions.
Invoice Management systems are great, as long as you have POs, contracts, goods receipts, and other documents to m-way match against! Otherwise, they just collect e-paper that still has to be manually reviewed. (And in the average organization, that still typically results in them being printed.)
Supplier Management is great for managing information, relationships, and performance, provided their are networks and portals to collect the data from, and internal systems to create and manage scorecards to define performance improvements on.
Product Management is key to understanding the product and category dynamics, but then you need category management strategies to map to.
And, these days, instantiations and realizations of risk can wipe out the savings from 10 sourcing projects, so risk management is paramount, but detecting and monitoring for risks requires a slew of systems internal and external and lots of data.
In other words, every system is great, but generally only if you have one or more systems to collect the data it runs on or supplement key functionality.
Which again begs the question, what are your priorities? Otherwise, you’ll never know where to start.
15/05/2018 23:48 | Share
Governments across Australia contract more and more essential services from not-for-profit and non-government organisations (NGOs). Prime examples are the rollout of the National Disability Insurance Scheme (NDIS) and the NSW Smart, Skilled and Hired program.
But how should government agencies go about incentivising these service providers to achieve or better exceed performance expectations?
15/05/2018 23:48 | Share
We all have a part to play in creating a world that is fit for future generations
With spend in supply chains representing an average of 60% of an organisation’s budget, procurement strategy and processes have a profound ability to affect the social, environmental and economic sustainability of business at large.
08/05/2018 16:44 | Share
Sourcing only identifies value. But value is not realized until it is captured. Capturing value requires each purchase to go through the system and be realized as a perfect order — the right product at the right place at the right time for the right person at the right price using the right delivery method, and so on. In order to make this happen, an organization has to do more than source — it also has to execute, track, report, and correct. Otherwise, it will fail to realize 30% to 40% of negotiated value (which is a statistic that has been well known for almost a decade).
However, the only way an organization can properly source, execute, track, report, and correct procurement operations is through proper program management, which is much more than just executing an event, negotiating a contract, and filing it away in the contract management system. It’s taking that e-paper and making an e-process out of it, preferably in an integrated Source-to-Pay platform that can insure each step of the program is followed.
This requires a program-management based platform, something which the average Procurement organization does not have as most first, and even second, generation sourcing platforms did not have any real program management built in.
And when one thinks about what is involved when one tries to consolidate the messy and muddled functionalities scattered across the ERP, analytics, invoice processing, contract management, supplier management, and other supply management platforms across the organization, supply program management can be a difficult and complicated task. The solution of which is an effective program management strategy, backed up by an appropriate platform-based solution.
To find out how to get started, download the doctor‘s latest white paper on The Importance of Program Management For Savings and Value Realization”, sponsored by SynerTrade. The read will be worth your time.