Author Archives: Pierre Mitchell



About Pierre Mitchell

Pierre leads Spend Matters procurement research activities and has broader solution development responsibilities for intellectual property creation and firm strategy as Managing Director of Azul Partners. This includes spearheading efforts to build new types of interactive and social communities of interest within the procurement profession including overseeing the evolution of spendmattersnet.com, Spend Matters PRO, MetalMiner, and other digital assets within Azul Partner’s umbrella. Pierre has 25 years of procurement and supply chain industry and consulting experience, and is a recognized procurement expert specializing in supply processes, practices, metrics, and enabling tools and services. He is a regular contributor to business publications, a frequent presenter at industry events around the world, and counts himself fortunate to have served and interacted with so many CPOs and future CPOs. Prior to his positions in research and advisory, he led numerous operations and systems transformations at Fortune 500 organizations. Industry positions include manufacturing project manager at The Timberland Company, materials manager at Krupp Companies and engineer at EG&G Torque Systems. He holds an engineering degree from Southern Methodist University and an MBA from the University of Chicago. In the early 2000's, Pierre was the first supply chain practitioner to become a procurement "industry analyst" as the VP of supply management research at AMR Research (now part of the Gartner Group) where he provided trusted counsel to procurement executives, business leadership, IT, and the solution providers who serve them. Most recently, he was the head of procurement research and adjunct business advisor at The Hackett Group, where he helped expand Hackett's procurement benchmarks and research studies while growing the Procurement Executive Advisory Program into a gold standard membership-based procurement advisory service in the market today.


10 Questions Jaggaer’s Acquisition of BravoSolution Should Raise for Customers and the Market (Part 2)

Jaggaer’s acquisition of BravoSolution raises a number of questions for customers and partners regarding the broader strategy that Jaggaer and its owner, Accel-KKR, appear to be following in the market. In the second installment of this research brief, we pose five more questions customers, prospects and partners should consider as they explore the combination and what it means for them. (See questions one through five here.) These questions center on Jaggaer’s solution gaps that will remain following the acquisition of BravoSolution, whether the verticalization of procurement technology solutions matters, what it will take to enable a “super suite,” specific procure-to-pay (P2P) considerations and whether the transaction might trigger other acquisitions in the sector.

10 Questions Jaggaer’s Acquisition of BravoSolution Should Raise for Customers and the Market (Part 1)

This Spend Matters PRO Research Note asks 10 questions that Jaggaer and BravoSolution customers and partners should consider asking as informed “consumers” of this combination. These questions cover both the recently announced acquisition of BravoSolution by Jaggaer and general considerations based on Jaggaer and Accel-KKR’s business strategy as we see it. Part 1 of this research brief covers questions one through five, while Part 2 covers questions six through 10:

  1. What is a roll-up, what benefits does it bring and why is Jaggaer following this strategy?
  2. What did Jaggaer see in BravoSolution? And why does this matter for BravoSolution customers?
  3. Will the strategy that Jaggaer and Accel-KKR appear to be pursuing end up being a net positive for customers?
  4. How did BravoSolution operate before (e.g., regional managers and “postponement” of solution delivery approaches at the local level) and how might this acquisition change its previous approach?
  5. Is there advantage in size alone?
  6. What gaps will remain in Jaggaer’s portfolio following the closure of the transaction?
  7. Will verticalization (industry-based approaches) to procurement technology end up being more about marketing or more about product?
  8. What is a “super suite” as claimed in the announcement of the combination?
  9. What might happen to Jaggaer and BravoSolution’s individual procure-to-pay solutions as a result of the combination?
  10. Will this transaction trigger other acquisitions in the sector? And what does this mean for customers of other solutions?

A Different Sort of Influence: 16 Areas Where Supplier Management Can Help Engage Your Stakeholders Strategically (Part 1)

Supplier management is too often an afterthought in the eyes of procurement and its stakeholders. Yes, it's important to collect supplier qualification information through the sourcing and onboarding process, and then also monitor the suppliers against their contracts to get what you paid for and to reduce supply risk. But shouldn’t there be more to supplier management?

Progressive organizations are beginning to use supplier management (and third-party management more broadly) as a better overall governance structure for how to best externalize the enterprise. This is especially true as supply markets get digitized (and disrupted) and supplier innovation can be brought to bear beyond cost/spend savings.

“Innovation management” is indeed one of the areas where a supplier management approach can help procurement influence stakeholders, but there are 15 other ways, as well. Having a broader palette of value creation (for which we’ll discuss six major value streams) will not only help improve spend influence but also improve the quality of influence to help elevate procurement’s value proposition.

What if Procurement Managed Itself like a Supply Market? And Which Market?

Procurement, like any service business, should generate value. Based on widely known benchmarks, this translates on average to a 4X–5X “procurement ROI,” where the “R” is demonstrable economic value annually created by procurement divided by the annual investment in procurement, usually the annual procurement budget. Here’s an example. If total addressable spend is $500 million and the procurement budget is the general industry average of 1% of spend, the business is investing about $5 million in procurement. Most of this investment goes to labor, with only about 10% of this is allocated for technology. And of the $500,000 spent annually on technology, probably less than a third is discretionary spend for procurement, while the rest of the money is spent on ERP licenses/maintenance, custom systems, integration and IT support. That leaves about $150,000 for supporting a lot of requirements in spend analytics, e-sourcing, contract management, supplier management and P2P, to name a few.

Fast and Included: Amazon Business Launches Business Prime Shipping

Amazon Businesses customers in the U.S. can now access unlimited, free two-day shipping on eligible items through a paid annual membership for multiple business users, the company announced Tuesday. Called Business Prime Shipping, the program brings the Amazon Prime shipping benefits consumers are already familiar with to Amazon’s B2B offering. Membership fees are tiered based on the numbers of users on the business account.

Can Procurement Save the Government?

Think about the role of effective government: defend the nation from risks and support the citizens, with minimum tax burden. And in a capitalist society that is of, by and for the people, the government needs to tap market innovations of the same people it serves to solve big problems, be it national security, healthcare or recovery from disasters. The same is true in commercial enterprises. Procurement in companies is chartered with bringing in innovations and helping defend the enterprise from external risks in the supply chain while also helping maximize value to demanding stakeholders.

DHL Resilience360: A High-End Supply Risk Solution Hiding in a Logistics Services Provider (Part 2: Determining the Fit)

The market for supply chain risk management solutions continues to grow. SAP Ariba is back in the game, after a market hiatus from SAP Supplier InfoNet, with a new solution. Incumbents such as riskmethods and Resilinc continue to build out their offerings, and eager adoption from a growing customer base in manufacturing and other sectors is driving one of the healthiest revenue CAGRs in the procurement sector, according to Spend Matters research.

Within this sector, DHL Resilience360 offers a compelling set of capabilities that span risk assessment, supply chain network visualization, incident monitoring and risk response. (See Part 1 of this analysis for a full overview.) The solution stands out for how it incorporate logistics components into broader aspects of supply chain risk management.

This second installment of our analysis introducing DHL Resilience360 explores what types of customers are the best fit for the solution. It also offers a checklist to help organizations assess the relevance of Resilience360 for their risk management initiatives. But first, this analysis begins by asking key questions in the context of organizational supply chain risk management maturity, readiness and priorities, including, “Who should use this solution and why?”

DHL’s Resilience360: A High-End Supply Risk Solution Hiding in a Logistics Service Provider (Part 1: Solution Overview)

Global Risk Management Solutions

If your current lineup of risk management solution contenders fails to include a supply chain logistics services player (LSP), also known as a third-party logistics provider (3PL), you may want to consider a timeout. As the largest LSP in the world, with approximately 510,000 under its employ, Deutsche Post DHL Group has entered the solution space with a game-ready option that is worth a serious look.

If you have initial concerns about the “motivations” of a technology platform funded by a major physical supply chain participant; or the relevance of all of those supply chain operators; or how a company like DHL, which owns significant carrier assets, avoids conflicts of interest, well, you’re not alone. In fact, that pretty much describes the mindset we brought to our meeting with DHL’s Resilience360 product leadership.

In spite of these concerns, we came away extremely impressed. Resilience360 has functionality rivaling that of the market leaders (e.g., Resilinc and riskmethods).

DHL’s new solution suite offers a nice path forward, including a unique diagnostic approach that provides supply chain organizations a way to walk before they run full speed into a comprehensive supply risk application suite. For DHL, it’s a great way to move up the value stack as a more strategic supply chain services partner beyond core logistics execution, and it also takes advantage of the capabilities DHL has built in its core business, extending them to its customers. Such an approach is analogous to the classic IBM business model: “We’ve done that to ourselves very well and can do that for you as a service.” Of course, IBM might not be the shining example to hold up given its performance over the last few years, but let’s not let the data get in the way of a good metaphor.

In this two-part Spend Matters PRO analysis, we’ll dive under the covers and evaluate the capabilities of DHL’s multi-pronged solution and give some evaluation guidance on its capabilities relative to other options in the market.

How to Use Planning and Budgeting to Transform Procurement — and the Enterprise

As summer turns to fall, that time of the year that so many enterprises enjoy and look forward to is here: the annual planning and budgeting process for next year. Yes, I’m kidding. This process ranks only a few notches above root canal for most budget owners. Yet if you had to look at the single most powerful best practice within procurement, especially for indirect procurement, it would be procurement’s involvement in the planning and budgeting process to improve the effectiveness of this process for stakeholders and for procurement.

To restate this: The best way to increase spend influence and to translate it into economic benefits is to increase the quality of spend influence. Getting a seat at the table can be challenging, but this table is a perfect entry point, and it also allows procurement to set its own table and bring stakeholders to it. The beauty of planning and budgeting is that it requires some incremental capabilities that are critical for procurement and, more important, for the business. This includes analytics, benchmarking, policy setting and continuous improvement (most of it enabled by strong technology, of course) even beyond this annual process.

Such early engagement also creates a moment of truth where procurement and finance either come together to unlock this value or where they are left to their own devices. In this analysis, I will highlight the hard dollars surrounding this broader practice and how progressive organizations are creating this critical joint capability, as well as give some pragmatic advice regarding how to implement this benevolent and transformational multiheaded beast.

RapidRatings: Vendor Snapshot (Part 3) — Competitive & Summary Analysis

RapidRatings is a proven supplier risk management solution that specializes in financial risk management. Many large enterprises depend on it as a core component of their supplier risk management programs. It brings the ability — a critical one — to evaluate privately held suppliers, including a methodology to get even small and middle-market firms to submit financials with very high success levels.

Spend Matters analysis suggests that RapidRatings has a proven and comparatively superior methodology to alternative established models for developing accurate and predictive supplier financial risk ratings — especially for privately held companies — and gaining insight into overall supplier financial health. But it is important to note that the provider does not offer a comprehensive supplier or supply chain risk management solution and ideally should be considered as a component within a broader supply risk management capability.

This final installment of our multipart Spend Matters PRO Vendor Snapshot series covering RapidRatings offers a competitive analysis and comparison with other procurement technology providers (suite and otherwise). It also includes a user selection guide, user interface and user experience (UI/UX) analysis and summary evaluation and selection considerations. Part 1 and Part 2 of this PRO research series provide a company and deep dive solution overview, a SWOT analysis, product strengths and weaknesses and a recommended fit analysis for what types of organizations should consider RapidRatings.

Can Google take on Amazon in B2B E-Commerce?

Google recently announced a partnership with Wal-Mart to feature the retailer’s items within the voice-activated Google Assistant. Both firms obviously face a shared enemy with Amazon, and they are looking to emulate the Alexa-based voice ordering of Amazon products.

Wal-Mart already participates within the Google Express marketplace, which is Google’s simplistic version of Amazon.com. But this partnership gives consumers a new way to connect to the marketplace.

So, what’s the big deal here? Not much on the surface. But it signals that Google is going to have to get serious in e-commerce. And it’s about time, because Google actually has huge potential in e-commerce. Unfortunately, Google’s performance in that sector, in terms of its ability to monetize its search in new ways (especially in B2B), has been underwhelming, to put it mildly. To understand why, let's explore the good, the bad and the ugly of Google's move in a broader context.

Supply Dynamics: Vendor Snapshot (Part 1) — Background & Solution Overview

manufacturing

Direct materials procurement is similar in some respects to indirect procurement: you want to see your spend, aggregate demand and find opportunities to reshape your value chain to unlock value. But that’s where the similarities end. Analyzing direct spend (especially across multiple tiers of supply) is sometimes like seeing a cloud of smoke coming out of your tailpipe — you know there’s something wrong but don’t know the cause. For indirect spend, you basically change the oil, replace the air filter and hope for the best. But for direct spend, you need specific engine diagnostics to figure out what’s driving performance and how much you could potentially improve. And unfortunately, in many cases, the manufacturers of those engines parts don’t want you poking around under the hood.

Whether it’s for plastics, resins, hydrocarbon feedstocks, agricultural commodities, standard catalogue parts, electronic components or metals, you must translate your demand for parts into the raw materials that go into them. And you must understand the demand volumes, supply chain capacities and processing capabilities that drive that pricing — especially if you want to tap into aggregated buying channels beyond the stuff you buy to support your own internal factory requirements.

This intersection of supply chain modeling, demand forecasting, demand-supply reconciliation, demand aggregation and commodity price forecasting is where Supply Dynamics plays. The idea originated with one of North America’s largest privately owned metals distributors where the opportunity to roll up demand information across OEM customers and their outside contract manufacturers gave it a unique opportunity to build out specific analytics that would help it size up opportunities for its customers and itself. But last year that technology was liberated from its previous owners and is now a commercial offering for any manufacturer or distributor that wants to optimize its own extended supply chain.

This Spend Matters PRO Vendor Snapshot provides facts and expert analysis to help buying organizations make informed decisions about whether they need a solution like Supply Dynamics to expand their analytics initiatives into previously unchartered materials and supply chain components. Part 1 of our analysis provides a company background and detailed solution overview, as well as a summary recommended fit suggestion for when organizations should consider Supply Dynamics. The rest of this multipart research brief covers product strengths and weaknesses, competitor and SWOT analyses, user selection guides and insider evaluation and selection considerations.