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.

In Defense of the Signed Document

Many people refer to ERP systems (notably master data stored in them) as the “system of record," which is interesting terminology. Think about supplier master data entered in the buyer’s ERP system that immediately can become “stale” the moment it’s entered. Let’s even take a better example of the penultimate document of record between the trading parties: the contract. A buying organization can use a contract lifecycle management solution that is fully integrated with an e-sourcing solution and even Microsoft Word documents that can be used as the user interface of sorts in contract authoring. Data is tracked at a detailed data element level and built up from low-level clause libraries. Yet when it comes time to seal the deal, the buyer and supplier print the contract and then start scurrying around for the final signatures, usually hand-written and faxed, only to then be stored and scanned so that the document image can be attached back to the CLM/ERP system. In today's Spend Matters PRO research brief, Pierre Mitchell makes an argument for the need of systems to accommodate the data types and user types across the source-to-pay continuum.

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Taulia Raises $27 Million, Valuing Company at 15X Trailing Revenue (Roughly)

We continue to be surprised at some of the funding rounds and public company valuations in the sectors of procurement and trade financing (receivables and payables financing). However, Taulia is one of the few vendors that I’d bet my own money on to grow into what is a curiously high valuation based on historical – even historical tech – norms. It’s my estimate that the recent Taulia valuation round was done on a valuation multiple roughly around 15 times trailing top line numbers. I base this multiple on a napkin sketch of Taulia’s current accounts and business activities (including program adoption) and a WSJ blog pegging the overall valuation at $200 million.

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Trojan Rabbits and Project Portfolios: Procurement Market’s Freemium Applications and Services (Part 1)

The old Trojan horse trick has its place in the procurement market. This Spend Matters Plus research brief, by Chief Research Officer Pierre Mitchell, covers the good, bad, and ugly of “freemium” technology for different types of procurement solution providers across the solution spectrum, from technology providers to membership-based advisory firms. Pierre then makes some recommendations for not just solutions providers, but also practitioners who themselves are providers in their own right. If you are not yet a Plus subscriber and are interested in this topic, contact us to inquire about a free trial.

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Procurement Provider Net Promoter Study

- July 17, 2014 11:11 AM | Categories: Analytics, Commentary, Procurement Research

We’re launching the first round of an ongoing “benchmark” survey that gauges procurement provider satisfaction scores for six different procurement process areas. In each, we measure importance, level of automation, currently selected vendors (as well as current/planned technology approaches), and of course the satisfaction score used to generated a promoter score. Depending on the answers to the questions, we also ask a few follow-on questions (e.g., what were the biggest reasons for low promoter scores) and finish off with some questions on major gaps with existing provider offerings (in addition to emerging technology areas). The first 100 qualified practitioners to participate get their choice of three incentives!

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Designing a Spend Category Taxonomy Properly is Harder Than You Think (Part 2: Go Deep)

- July 15, 2014 2:30 AM | Categories: Spend Analysis, Spend Management

Earlier in the month, we had a client ask us if we could offer specific guidelines or methodologies for creating a spend category taxonomy within the automotive and industrial markets. The question resulted in a discussion among a number of us with industry experience. And since we didn’t have any research already published on the topic, we thought we’d invest the time to document our findings. In this second installment of a two-part Spend Matters PRO research series, Chief Research Officer Pierre Mitchell explores how granular procurement should go in creating a spend taxonomy and concludes with practical tips for implementing a program.

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Designing a Spend Category Taxonomy Properly is Harder Than You Think (Part 1: Do This, Not That)

- July 11, 2014 6:34 AM | Categories: Spend Analysis, Spend Management

We had a question from a client of ours about whether there were any guidelines or an overall methodology to coming up with a spend category taxonomy. It’s a simple question, but there isn’t a simple answer. So, we thought we’d offer some insights to help guide your efforts. But before we say what to do, there’s a quick recommendation on what not to do. In this first of a two-part Spend Matters PRO research series, Chief Research Officer Pierre Mitchell explores how to think about creating a spend category taxonomy, pitfalls of incorrect approaches, and how to embrace an approach that cuts across categories and spend types.

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Purchase Price Variance (PPV) in Procurement and Savings Strategy: Limitations and One Potential Use

There are many reasons why purchase price variance (PPV) is not the best metric to track procurement performance. In last week’s Spend Matters PRO research brief, Why Purchase Price Variance (PPV) Should Be Banished From Procurement Measurements and KPIs, Jason Busch (Managing Director) and Pierre Mitchell (Chief Research Officer) gave 10 reasons why PPV can be misleading and how smart procurement organizations in the market have long since moved past it. These reasons include the fact that declining and rising cost variables outside of a buyer’s control can have a significant effect on individual part costs not reflected in the actual performance of a procurement manager and the fact that PPV fails to measure true lifecycle costs. In today’s Spend Matters PRO research brief, Jason and Pierre start by providing a summary of the first analysis and then explore a scenario where PPV may actually be a useful means of measurement, courtesy of Tungsten’s new network analytics capability.

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Spend Matters 50/50: Corporate United – A Provider to Know

- July 3, 2014 6:21 AM | Categories: Purchasing and Sourcing, Solution Providers

After a second hiatus, we're back to covering providers who made our 50/50 list this year! Now, on to Corporate United, a provider to know. Some providers in the procurement services market can be very complex and difficult to understand – and then there are group purchasing organizations (GPOs) like Corporate United. Buying consortia have been around for hundreds of years (think agricultural co-operatives), and the core value proposition remains unchanged: there is buying power in numbers.

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Why Purchase Price Variance (PPV) Should Be Banished From Procurement Measurements and KPIs

One of the biggest challenges to overall program impact and improvement in all but the most advanced procurement organizations are the raw elements that many procurement organizations measure themselves against: key performance indicators or KPIs. One of these, purchase price variance or PPV as it is often known, is particularly obnoxious in all but certain cases. PPV measures the difference in price paid for across a range of purchases for a similar SKU, part, or service.

There are many reasons why PPV can be such a misleading figure.

In this first of a two-part Spend Matters PRO research series, Managing Director Jason Busch and Chief Research Officer Pierre Mitchell explain why precisely PPV is a KPI that procurement organizations should stop measuring internal and individual performance against. Part 2 will present the one case in which it might be helpful to police suppliers more accurately (courtesy of a new, real-time network approach to gathering spending data from Tungsten based on actual line-level invoice information that we believe will eventually become standard across many supplier networks).

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Gamification in Procurement – Looking Beyond the Technology

Gamification is a topic that has garnered some interest over the last few years, and I thought it would be a good topic to explore a little more deeply in terms of its application to enterprise procurement and supply chain. This is an interesting technology area that a few enterprises have sought to transplant from the mobile B2C world over to enterprise processes to help improve relationships with customers and with internal employees. For example, some progressive HR organizations are setting up wellness programs that reward employees to exercise and use mobile game apps to help motivate them. Similarly, some sales organizations have used it to create contests that let sales reps compete with each other for additional bonuses and recognition. In this Spend Matters Plus research brief, Chief Research Officer Pierre Mitchell looks at how gamification can be used in procurement, as well as where the benefits stop.

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Business Process Management (BPM) for Procurement: A Spectrum of Choices

BPM stands for Business Process Management. If the business process is procurement (i.e., a collection of processes), then the concept is about managing procurement processes – including process design/definition, performance management (e.g., process outputs/KPIs, monitoring), and resource management. Of course, in the IT world, BPM has its own body of knowledge regarding the topic, focused mostly on “process workflow/integration on steroids.” This is the “system of process/interaction/engagement” that may sit on top of multiple systems of record (e.g., ERP, source-to-pay suites). But how can you approach this topic without your eyes glazing over? In this Spend Matters PRO research brief, Chief Research Officer Pierre Mitchell and Managing Director Jason Busch define BPM components and offer up practical ways to apply BPM to procurement, keeping the topic on a business level and issuing both warnings and best practice tips for companies deploying or considering BPM technology adoption within the function.

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Procurement Centers of Excellence (CoE) – What’s in Them and How to Set Them Up

Nearly all progressive organizations have some sort of Procurement CoE (Center of Excellence). A Procurement CoE is an internal entity that performs internally facing knowledge-based services on a one-to-many basis to procurement (and to broader stakeholders) in order to drive scale, repeatability, and best practice. What we’re talking about is the industrialization of the Procurement portfolio of services. In this Spend Matters PRO article, we will investigate 14 procurement competencies that are being enabled and improved in a Procurement CoE. We will evaluate the relative priorities across these based on some recent research and provides insight on how a Procurement CoE can not only make procurement processes more effective, but also align with broader enterprise services delivered in a “Global Business Services (GBS)” environment.

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