Why procurement tools are stuck in the past and what you can do about it

This article is an excerpt of a discussion between Spend Matters CEO and founder Jason Busch and Kieth Hartley, CEO of LevaData. You can read the full interview here.

Change is tough. No matter the industry, change means risk. When something is working well enough, changing it invites risk into the established process. Therefore, things change only when necessary. Procurement, as an important part of manufacturing, falls into this mindset.

Perhaps that’s why procurement tools never evolved much beyond spreadsheets. Other parts of organizations have access to all sorts of advanced ERP, CRM and marketing platforms because they were perceived to have a bigger impact on an organization’s bottom line. Things had to get crazy before organizations realized they’d been underinvesting in procurement teams and technologies.

Now there’s an opportunity to see procurement in a new light as advanced AI-powered direct materials sourcing platforms fill the void. Looking at what we’re likely facing in the future, advanced AI-powered materials sourcing platforms will only become more powerful and impactful.

Interview with Jason Busch, founder and CEO of Spend Matters, and Keith Hartley, CEO of LevaData

Jason Busch: Given the unprecedented number of supply chain disruptions over the past few years, why do you think a lot of organizations remain hesitant in adopting new technologies to work with new sources of supply, source more strategically and design more optimal supply chains?

Keith Hartley: Change in procurement lags other investment areas like traditional supply chain, supply chain planning, warehousing, transportation and even ERP under the auspices of consolidation and rationalization. It takes a compelling event to get after the agita that companies see in their organizations, and we’ve seen that with Covid-19. So, I think a lot of these companies are now visiting baseline assumptions about why they’ve waited on sourcing projects and prioritized other enterprise software technologies ahead of them.

Jason Busch: Given the compelling cost and risk reduction, which go hand in hand with better sourcing, what do you think it will take for some of these organizations to say, “This is the best thing I could be doing right now?”

Keith Hartley: Everyone on the planet accepts that salespeople need a CRM tool to do their job and CFOs or controllers need an ERP system to do their job. But a procurement or direct material sourcing professional? There isn’t yet agreement that they need their own version of a CRM or an ERP tool. Procurement people are no different from any other team at a company and they don’t walk on water. They’re not professional-level surfers.

Jason Busch: To build on your analogy on surfing. I was surfing a few days ago on the beach in Tel Aviv. I’m worried, my knees are going to go as I stand up. But then, as soon as you’re up, you’re fine. It’s just kind of this nagging fear, that something is going to happen when I’m in that transition phase from getting pushed to standing.

Keith: It can be scary until you go for it and try it, and you see your knee will hold out and you can do it. You know there’s another surfing analogy I’ve been talking to a lot of executives about.

At LevaData, we take some customer data, and show them what’s possible. We do that for free. We do that to show the power of our platform in someone’s environment. And, when they become customers, it’s analogous to the drop in surfing. There’s a moment when you catch a wave, and you commit and go all in on the wave. When you time the drop, and you totally commit and go for it, amazing things can happen as a surfer.

Jason Busch: Do you think we can blame supply chain disruptions on legacy technology?

Keith Hartley: I think that’s justified. I’ve been in supply chain for over two decades, and the onset of Covid-19 was a wonderful commercial, if you will, for all things supply chain.

It greatly affected the world in very negative ways, but the awareness of what a supply chain is, and how vital it is, and how to build resilience is something I no longer have to explain to my mother. It’s like we’ve built that kind of global awareness around supply chains. The supply chain has been the most underinvested enterprise category of software on the planet. I think that’s the reason why there’s been a lack of adoption for tools in and around procurement and supply chains.

Jason Busch: In a future state of 2025, what impact would you want LevaData to have had on helping companies overcome these obstacles?

Keith Hartley: There’s a universal acknowledgment that we need to change things to make the world a better place and make it just as habitable 100 years from now as it is today.

As governments, regulations and programs evolve and tell us to “shift to carbon and shift off of carbon and shift to other types of environmental concerns,” we need to adapt our business practices as a procurement profession. It’s using good, contextualized data to make better sourcing decisions.

Jason Busch: Are there other industries outside of the core you serve today that you think could also be served by what LevaData is doing?

Keith Hartley: Closer to summertime, we’re going to release our metals ingestion engine, where we’re ingesting benchmarking metals data. For many manufacturers, a really core part of their purchase cycle is core metals. We can go more into things like pharmaceuticals or chemicals and agricultural chemicals.

Our data aperture can help the global agriculture chemicals market, particularly around putting less fertilizer and more locally sourced ingredients into the AG chemical supply chain and using LevaData to make smarter, better buying decisions in that market.

We’re going to maintain our lead in knowing more about parts, ingredients and metals and continue showing people the power of contextualized data.

For the the full interview, click here.