Procurement can get isolated. It can report to various internal clients and be measured against arbitrary KPIs. Even price reduction achievements are arbitrary if you don't implement them or if the quality, delivery, etc. is subpar. Yet data integration can help overcome business isolation and a failure to align metrics effectively.
But there's some good news (one hopes). With procurement, finance, legal, and the sell-side gradually converging in their datasets, sharing data points, and ideally working off an MDM (master data management) playbook, integration is no longer avoidable – one can embrace it!
Here's a practical frontline example from Sears (and let's hope the Sears employee union doesn't come out of the woodwork like the USPS folks did after Richard's story last week).
As background, I have shopped at the local Sears store for many years. My shopping carts have consisted of specialty tool purchases, larger goods such as fridges, freezers, cooktops (they even carry upscale brands like Bosch, and their warranties and local support are good) and similar infrequent purchase items that I'd rather not buy off the web. In the process I've acquired a Sears card, so they "know" me by now. Or so I thought.
This past weekend, I went to Sears' auto section (located right next to the general Sears store in its own building with a tire center) looking for a battery for my brother-in-law's car. Again, their warranty is attractive. Battery found, and about to purchase, alas, I left my Sears card is at home... Not to fear, I don't need to show it in the store, they just pull up my record and I key in the PIN and, voila.
Well, not quite. That won't work in the auto department. "Our systems don't talk to each other," said the lady behind the register. OK, so next step was the cashier calling their customer support person (who could allegedly look it up in another system) but they in turn couldn't find me in their system either. Note that I have an unusual last name. It's usually pretty easy to find a Thomas Kase. Yet they also couldn't find my name or my phone number either, and I've used that number going on 10 years now!
Trying to be creative, and wanting to place the purchase on my Sears card (and also because I enjoy sniffing out how a company's system works, or not) I headed over to the regular Sears store to pick up a bottle of detergent and pay for that.
The payment process was simple. They pulled up my record, I entered my PIN, and we're done. Unfortunately, despite the clerk's reassurance that my receipt will have a "day pass" with a scan code that the auto side could use, no such thing printed out. The clerks rallied around the register looking at it, scratching their heads – so my warm and fuzzy feeling about the Sears store's better systems quickly vanished.
Back to the auto store – and now I've given up. It's time to take out the trusty AmEx. But just then, my wife finally called me back to give me the Sears card info from our last statement.
The cashier keys in that number – and then asks for the expiration date, which wasn't on the statement, so again I'm getting the sinking feeling that I'll have to switch to the AmEx card. Surprise! She says "let me try 11/2015, it usually works" - and it did! So, at the end of this crazy exercise I walked away with the battery on my Sears card – and shaking my head at their confounded state of their POS (point of sale) and CRM (customer relationship management) solutions. Oddly, they managed to immediately send me a thank you email even though they couldn't find my phone number!
This use case is obviously a few steps removed from procurement, but I am willing to bet that Sears has a similar disconnect in their procurement systems. Speculatively, here is what I suspect goes on behind the scenes at Sears:
- Vendor master fragmentation across ERPs and A/P systems
- Spend analysis via (and sourcing) via spreadsheets
- File cabinets and email servers to store (not manage) contracts
- Disconnected requisition to purchase order process – rekeying most likely
- No effective use of advance ship notices
- Ad hoc receiving and matching against the PO, with rebates and discounts extracted depending more on the quality of the staff involved than enforcement by a system
- Billing and payment reconciliation that leaves double payments and other problems in its wake
- In general, a system still reliant on much manual work and rework
I'll stop there. I think you see the same picture as I suspect is there – I have no insight into how Sears actually runs their business, but this is my educated guess after not only the recent incident, but from many years as a customer.
Just as the Japanese consider inconsistently applied shipping labels (on the outside of the box) evidence of a flawed manufacturing system, I am suspicious of the internal workings of firms that can't get their primary revenue driver (the cash register, aka point of sale system) squared away.
Closing with a shout to those in companies that are closing in on affective MDM across suppliers, products, and customers – please send us a note, we would love to talk with you about your journey and the lessons learned.