supplier networks Content

‘What other needs do you have?’ — Lessons from ConnXus, a supplier relationship expert

Supplier relationship management (SRM) has grown from just sourcing the best deal to really evaluating suppliers for diversity, ability to innovate, value generation and their risk.

In this series on SRM, we’ve discussed how the development of supplier diversity has improved supplier management overall, and we’ve explored how companies can meet their goals to have a robust supply chain that’s diverse.

Businesses now know to get their spend data in order and should know how to measure the impact of that spend. They should be able to develop suppliers and drive innovation. Responsible businesses can protect their brand reputation by assessing their main suppliers (tier 1) and those deeper in the supply chain, as well as having a plan to mitigate risks, like unethical sourcing, forced labor in the supply chain or poor performance in the past. But, it’s also clear that lacking in supplier diversity or being weak in supplier information management (SIM) are risks themselves.

To learn more about these issues, we talked with SRM expert Daryl Hammett, the general manager of ConnXus, a provider that connects buyers and qualified suppliers.

Community-based Procurement — Get a Buy with Some Help from Your Friends (Part 1) [PRO]

The Oxford dictionary defines “community” as “a group of people living in the same place or having a particular characteristic in common” and secondarily as “a feeling of fellowship with others, as a result of sharing common attitudes, interests and goals.” Procurement practitioners inherently have kinship with each other based on shared experiences, pain, rewards and knowledge/know-how. Being in the tribe means you can learn from this collective intelligence and apply it individually and locally.

But, what are the best ways for practitioners to gain the wisdom of the community? Certainly peer networking events (in person or virtual) are popular, but they can be time-intensive and difficult to justify on a hard ROI. Training, memberships, conferences, subscriptions and other discretionary expenses are the first to get slashed during budget cutting. The other related issue is that the knowledge being shared is scattershot rather than a focused knowledge transfer that delivers capabilities that will pay off toward some outcome.

Community-focused outcomes can take many forms (e.g., supplier diversity, sustainability, supply chain resiliency, innovation, quality, etc.), and these communities can have many “community owners” (e.g., associations, service providers, B2B networks, tech vendors and even practitioner organizations themselves creating communities with suppliers and other ecosystem partners), but nearly all procurement folks have a common goal: cost reduction.

If cost reduction is the goal, there are many levers to pull, but good old-fashioned buyer leverage through demand aggregation never seems to go out of fashion. The notion of collective buying power is certainly not a new concept. Agricultural buying cooperatives have existed for hundreds of years. And group purchasing organizations (GPOs) are certainly a tried-and-true strategy for procurement organizations, especially those outside the Fortune 500. We’ve written a lot about GPOs, and there are plenty to choose from that provide not just aggregated volume pricing, but also varying community-based services such as events, benchmarking and partner services.

While GPOs are great, the beast known as “digital” is eating, well, everything! So, we have to look at where tech providers are playing here. And even the idea of digitally enabled GPOs isn’t new. Ever heard of MobShop or Mercata? They tried to do automated demand aggregation almost 20 years ago and are now a footnote in the dot com dustbin. Even ICG Commerce (now Accenture) had a horizontal e-marketplace with a GPO component to it before it transitioned to its BPO model. Back then, Accenture and EDS formed ePValue and CoNext, respectively, as consortia buying groups within their client bases, but that didn’t pan out either.

Times have changed, though, and newer technology and business models are gaining traction. Back in that era, I was bullish on digitally enabled group buying and, more broadly, large buy-side app vendors harnessing the power of their collective installed base for economic benefit. I bemoaned that “enterprise application vendors with large installed bases are not bringing the leverage of group purchasing to their communities,” and posited that “many of these vendors have active vertical and horizontal user communities that could be leveraged into powerful group purchasing entities. Some vendors might choose to use as an attractive differentiator while others could offer it as a value-added service.”

Yet, while I’m happy to see so many evolving options in the market right now, there still are some areas for buyers to consider in building out their own ecosystem capabilities that may leverage various types of digitally enabled solution/service providers.

In this SpendMatters article, I’ll address the following:

* Evaluating practical group-buying options available in the market
* Looking beyond traditional GPO models for community-based value
* Examining how companies like Honda and Toyota use a community-based approach with their suppliers
* Broadening the focus from “community-based sourcing” to “collective intelligence” in procurement as a means to perform more scalable knowledge transfer than just traditional community approaches
* Examining our SolutionMap criteria element called “Community Knowledge and Collective Intelligence”
* Providing a snapshot into a serious multi-pronged effort that one vendor in industry is pursuing in this area — and should be considered the pacesetter

Without further ado, let’s jump into it ...

GEP: Vendor Snapshot (Part 5) — Solution Weaknesses [PRO]

In Spend Matters’ previous installment of our seven-part GEP review, we called out some of the real strengths of the SMART by GEP platform, including some that are rare in the market today. In this Part 5, we are going to balance our analysis by also pointing out some of the "weaknesses" of the platform, at least against peers. (A weakness isn't a weakness unless you are looking for, or need, a certain capability, which, of course, you may already have in-house in another platform.)

While we may have hinted at these by way of omission of coverage in our solution overview in Part 3 and Part 4, we are going to get more specific so you understand precisely what isn't there (and can make a judgment call as to whether you even need the capability). We’ll look at deep optimization (especially logistics), asset management for direct, VMS, trade financing, T&E and more.

How to reach your goals on supplier diversity and supplier management

When a company considers how to improve its supplier diversity, it can do so along with improving its supplier management overall. But how does a business go from getting started to reaching its goals with suppliers?

In the first article in this series, we showed that businesses starting this process don’t have to choose between supplier diversity and supplier management. You should do both at the same time.

But now, let’s consider how to execute a plan to build relationships with suppliers and reach your business goals. You’ll need to understand three areas of SRM, or supplier relationship management: how your suppliers align with your business goals, how you manage supplier risk and how you address supplier development.

Supplier diversity and supplier management: Don’t choose, do both

Supplier diversity connects to many trends occurring in supplier relationship management (SRM) these days, including developments like the rise of digital transformation, supplier networks and supplier collaboration.

As a business trying to start the supplier diversity process, it can be a daunting task to wade through-diverse supplier certifications and classifications to help you find a certified minority-, woman-, veteran- or LGBT-owned vendor for your company. But it can be worth it.

The methods that have made supplier diversity successful over the years now apply to other areas of procurement as well. Find out how.

Mastercard Track: A Gateway to a New Kind of B2B Ecosystem (Part 2) — SWOT Analysis and Market Implications [PRO]

Over a decade ago, American Express led the payments way in making innovative investments aimed at procurement organizations and their suppliers, primarily through its venture and partnership arms. (Remember MarketMile/Ketera, anyone?) But more recently, it appears that Mastercard has picked up the B2B innovation mantle, opting to organically build a solution aimed at buyers and suppliers with procurement front and center in the business case crosshairs. This new solution, Track, surprised us in multiple ways (click here for an introduction to Track), especially for its audacious supplier network vision (and we might add also for what it is not doing, at least not yet).

Is the tail of Mastercard’s new supplier network offering — comprised of a trade directory, supply risk monitoring capability and payment ledger — wagging the payments dog? The answer might surprise you. This purebred procurement solution can hunt without even hinting at the need to enable a virtual or corporate card swipe.

Indeed, with its new Track solution, Mastercard appears quite serious about the procurement and supplier management market beyond just finding creative ways of leveraging its rails to enable payments. With this new product release, Mastercard stands in contrast to American Express, among others, which still appears to be taking the same old B2B payments and financing pooch out for a walk, albeit with an updated veneer for the digital working capital era.

But before we drown in our doggy metaphors, let’s analyze what’s good — and what’s not so good — about Mastercard’s first generation Track release and what it means for procurement organizations, supporting services providers (e.g., consultancies) and the procurement technology sector as a whole.

Mastercard Track: A Gateway to a New Kind of B2B Ecosystem (Part 1) — Vendor Introduction and Solution Overview [PRO]

B2B payments represent a significant opportunity for payments providers. Within the U.S. alone, Deloitte research suggests that B2B payments are expected to reach $23.1 trillion by 2020, following a 5.8% CAGR since 2014, with large enterprises accounting for more than 60% of all transaction volume. Financial institutions, however, have placed comparatively less emphasis on the B2B space in favor of B2C transactions, which in spite of their smaller relative total size present less complexity in terms of technological and process problems to solve. Yet this is beginning to change. Banks, payment providers and other institutions are doubling down on the opportunities in B2B, and some are even starting to get their foot in the door by offering software targeted toward procurement organizations. For example, Mastercard has been rolling out its new Track solution in partnership with major banks and P2P and S2P suite providers and via public demonstrations at vendor conferences like Basware Connect and Ivalua NOW. Following the integration of Track’s payment capabilities with Singapore’s Networked Trade Platform (NTP) last year, Mastercard is getting its procurement technology start in, of all things, supplier master data and risk management. This may seem like an odd fit, especially when there are other technology providers offering similar — or in some cases, far more sophisticated — tools for managing supplier data and tracking third-party risk. As many B2B “old timers” know, banks and payment networks (Mastercard included) have been trying to insert themselves into P2P processes for nearly 20 years, and the results have been a failure every time, because they were always about funneling the transactions to their payment networks in order to charge suppliers 2% to 3% processing fees. This relegated these initial efforts to tail spend and highlighted how they couldn’t add value to the broader S2P process.

But we think this solution from Mastercard actually has huge potential and will likely be a market disruptor. Why? Well, from a practitioner standpoint, what would you think of a vendor who took all your supplier master data and then ran it through its “magic engine” and then showed you all the duplicates and supplier risk warning flags — and they did this on a freemium basis? That should catch your attention. And it should catch the competitive attention of D&B, LexisNexis, supplier networks, supplier risk/intelligence providers, supplier discovery tools and others that play in this space, as well as the partnering attention of S2P application providers that want an instant supplier network partner that can do more than process low-dollar transactions on a payment network.

Mastercard is just starting the first act of a longer, platform-based play, and the question today is simple: Is this “priceless” MDM and supplier risk solution worth a look? The answer is a resounding “Yes!” Because unlike other services in the space, Track takes the long view, supporting Mastercard’s aspiration to enable and connect into a global B2B ecosystem of multiple services, from business identity and risk management to payment facilitation and trade finance. And while we expect many of Track’s initial capabilities and partner offerings to evolve over time — what Mastercard has been publicly demonstrating over the past several months is more of a minimum viable product than a fully matured and battle-tested solution — the first cut is worthy of a deeper dive.

This Spend Matters PRO Vendor Introduction offers a candid take on Mastercard Track and its initial capabilities. Part 1 includes an introduction of Mastercard’s offering and a breakdown what the solution can (and can’t) currently do. Part 2 will provide a SWOT analysis and our key recommendations to interested parties (procurement organizations, technology providers, supporting services providers) evaluating Track as encountered through partner P2P or S2P providers.

Can Source-to-Pay Networks Go Beyond the Approved Invoice?

e-invoicing

Many source-to-pay (S2P) networks struggle to monetize their supplier ecosystem, and a few are looking to change things by using their network data to be more innovative with early pay finance, particularly invoice finance.

For those not familiar with invoice finance, there are three stages where it can be done:

SAP Intelligent Spend Group is future for Ariba, Fieldglass, Concur (Part 3): How can the SAP spend platform ‘Run Simple’? [PRO]

supplier network

The integration of SAP Ariba, SAP Fieldglass and SAP Concur into a single operating entity within SAP, the “Intelligent Spend Group,” will be far more straightforward from a commercial and go-to-market perspective than a technology architecture and platform vantage point. This Spend Matters research brief, the third in our series analyzing integration considerations for the Intelligent Spend Group, explores network and platform considerations and offers key takeaways for the company and SAP customers. Part 1 centered on specific integration models that SAP is likely to take (e.g., the SAP Cloud Integration Gateway) and what these approaches would mean for customers of multiple solutions. Part 2 asked the hard questions surrounding core integration considerations.

Visibility is Key to Managing CSR Risks in Indirect Spend, EcoVadis Says (Part 3)

Indirect spend often gets overlooked by businesses because the outcomes from buying those goods and services are not the company’s core product, which relies on direct spend. But the potential for lost money and increased risk is so great that businesses must find a way to manage indirect spend.

“The broad reach of indirect spend, coupled with a lack of visibility creates risk, so the key to gaining visibility and managing this risk is to prioritize indirect spend management within an organization and start assessing indirect supplier performance in a formalized way,” said EcoVadis, a risk mitigation provider that offers business sustainability ratings and intelligence.

EcoVadis joined us for a Q&A to explore the next steps to figure out how to identify weak points, prioritize areas to defend against and create a plan for mitigating risks.

Tealbook: Vendor Introduction (Part 2) — Product Strengths and Weaknesses [PRO]

cloud solutions

In our last Spend Matters PRO brief, we introduced you to Tealbook, a five-year-old provider based out of Toronto (with an office in New York City) that is deploying a new platform for supplier information management (SIM) and discovery. Combining machine learning to accelerate data cleansing and gathering with a social media-like user experience to encourage collaborative supplier information management, Tealbook is gaining use cases and enterprise-class procurement customers that want to:

— Consolidate and better manage their supplier master data — aka the “I” (Information and Intelligence) in SIM.
— Discover and on-board new suppliers more effectively than 1) Google searches and 2) searches within proprietary supplier networks.
— Create a system of intelligence surrounding suppliers both internally (e.g., within a spend category team or project team) and externally through fully permissioned, community-based knowledge sharing.
— Quickly bring supplier diversity programs to target levels.

Part 1 of this brief provided an overview of Tealbook’s offering and a short selection requirements checklist that outlined the typical company for which Tealbook might be a good fit.

In Part 2, we provide a breakdown of what is comparatively good (and not so good) about the solution, a high-level SWOT analysis, and some final conclusions and takeaways.

Tealbook: Vendor Introduction (Part 1) — Background and Solution Overview [PRO]

Procurement organizations today talk a big game about automating transactional processes so that they can focus on upstream value creation opportunities. The thinking goes like this: The biggest opportunities for procurement are not in squeezing diminishing savings out of the usual vendors year after year but in identifying and contracting with the most innovative suppliers that can enable exclusive competitive advantages. These include not only strategic sourcing efforts around major categories or products but also mutually beneficial relationship-based activities like supplier collaboration, development, innovation and risk mitigation.

Yet there are several obstacles to this shift in emphasis toward more strategic activities. One is remarkably simple: The majority of procurement organizations do not have a single, accurate record of all of their suppliers. Most of the vital information that would constitute a vendor master file is instead scattered across various silos, including ERP systems, dedicated P2P or S2P tools, homegrown tools, and proverbial three-ring binders. So before procurement can earnestly attempt to spend more time on higher-impact value creation opportunities, most organizations have a lot of work to do forming a baseline off which they can build stronger supplier management, discovery and development competencies. This baseline of supplier knowledge is not just about maintaining an accurate vendor master file to pay the bills, but also a hub for information to help build supplier intelligence and a private supplier network (albeit with some community-based elements) rather than any single commercial network/marketplace.

Helping organizations form this baseline is how Tealbook, a four-year-old provider based out of Toronto (with an office in New York City), is deploying its platform for supplier information management and discovery. Combining machine learning to accelerate data cleansing and gathering with a social media-like user experience to encourage collaborative supplier information management, Tealbook is gaining use cases with enterprise-level procurement organizations that want to consolidate their efforts in master data management (MDM), quickly bring their supplier diversity programs to target levels, and find new suppliers more effectively than a search on the open web allows, as well as expedite the supplier on-boarding process. And as it continues to bring more users and suppliers into its network, Tealbook generates insights that becomes increasingly valuable to its community (without ever sharing proprietary information between organizations).

This Spend Matters PRO Vendor Introduction offers a candid take on Tealbook and its capabilities. The first part of this brief includes an overview of Tealbook’s offering and a short selection requirements checklist that outlines the typical company for which Tealbook might be a good fit. The second part of this brief provides a breakdown of what is comparatively good (and not so good) about the solution, a high-level SWOT analysis, and some market implications and takeaways.