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.


Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation (Part 5) — Supply Chain / Direct Procurement Influence (Cont.)

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In the previous installment of this Spend Matters PRO series, we explored how procurement can improve its influence within the broader supply chain by supporting product/service lifecycles and transcending just basic BoM-based direct materials sourcing workflows. In that piece we explored how procurement can support sales and marketing processes to improve revenue uplift.

In this installment, we will continue our exploration of the rest of the overall value lifecycle from design all the way through to service and then finishing up with supporting the most important aspect: the transformation process itself.

Part 1 of this series laid out the need for leadership in procurement to help bring about transformational change — and how to work with stakeholders. In Part 2, we discussed how progressive procurement organizations were improving their influence through coherent communication and alignment of procurement “services” to various stakeholders.

Part 3 dove into procurement improving its influence into indirect spending and how it can improve how the business gets more value from its spend and its “spend management” process (e.g., dovetailing into the business planning process). Part 4 was an introduction to attention to supply management and direct procurement influence.

Let’s dig into what it takes to create strategic supply partners and also consider the technology vendors needed for extended supply networks.

Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation (Part 4) — Supply Chain / Direct Procurement (Introduction)

In the previous installment of this Spend Matters PRO series, we dove into procurement improving its influence into indirect spending and how it can improve how the business gets more value from its spend and its “spend management” process (e.g., dovetailing into the business planning process). In this installment, we’ll turn our attention to supply management and direct procurement influence.

You might think direct procurement shouldn’t have any misalignment with the broader supply chain, given that direct procurement is itself part of the supply chain. However, supply management is not always in sync with supply chain management.

Organizations that get it right through better procurement and supply chain alignment enjoy higher supply performance. We conducted some research on this topic a few years ago and showed the difference in supply performance between firms with this top quartile influence/alignment capability below:

Figure 1: Organizations that have top quartile direct procurement influence on supply chain management outperform their peers on numerous supply performance criteria



We’ll highlight some of these top capabilities and some of the strategies and supporting digital solutions that can help enable them.

Part 1 of this series laid out the need for leadership in procurement to help bring about transformational change — and how to work with stakeholders. In Part 2, we discussed how progressive procurement organizations were improving their influence through coherent communication and alignment of procurement “services” to various stakeholders.

This installment also has details about direct procurement vs. supply chain procurement, and we discuss some solution providers that can help.

Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation (Part 3) — Digitally Enabled Engagement, Outcomes, Demand and Spend

lending

In the first installment of this Spend Matters PRO series, we kicked off our analysis of how progressive organizations are influencing spend and stakeholders at a deeper level beyond traditional sourcing influence.

In Part 2, we discussed how progressive procurement organizations were improving their influence through coherent communication and alignment of procurement “services” to various stakeholders. This influence isn’t just seeking to drive stakeholders to procurement for procurement resources exclusively to create value that procurement gets credit for, but rather, to have procurement educate and enable stakeholders to make the best decisions that will deliver the outcomes most important to them.

Jeff Bezos, the CEO of Amazon, said in an interview, “I don’t think we make money when we sell something, we make money when we help someone make a purchase decision.” In other words, Amazon is looking to be your trusted advisor and buying concierge to help you get the best deal (whether or not you actually do — especially with dynamic pricing!), which keeps you in the Amazon “walled garden” and elevates its brand/role beyond just being another online supplier to find stuff. By broadening its value and “brand permission,” it can then “help” you make these purchase decisions and others in your life. Just ask Alexa!

In this installment, we will dive into the details of how some procurement organizations are digitally enabling this engagement and elevating their brand in ways that meet stakeholder outcomes but also allows procurement to see and shape the demand that will drive spend, supply and needed source-to-pay resources.

The “quality” of spend influence isn’t about late-stage sourcing involvement, but rather, early engagement upstream at the moments of truth when spend is being planned by a few critical budget holders — or when suppliers are being sought by thousands of employees with a business need.

In either case, procurement must proactively find the stakeholders or help the stakeholders find procurement (or find the preferred suppliers and their products/services via “guided buying”). There isn’t just one “seat at the table” for procurement, because there is not just a single table to sit at (although the CEO’s executive team/committee is a good one!), but multiple tables where stakeholders sit.

Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation (Part 2) — Empathy, Alignment, Mission, Brand and Procurement Service Delivery

In the first installment of this Spend Matters PRO series, we kicked off our analysis of how progressive organizations are influencing spend and stakeholders at a deeper level beyond traditional sourcing influence. In this next edition, we’ll dive into some strategies for deeper and more meaningful engagement with stakeholders, and some examples from some progressive procurement organizations.

Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation

procurement

Anyone familiar with YouTube “influencers” knows that they’re not trying to engage you for your benefit, but for their own. They intend to monetize that influence for themselves and their corporate backers.

Speaking of the corporate realm, the ability to influence others isn’t exactly a new concept. In fact, you can go back 85 years to read Dale Carnegie’s book “How to Win Friends and Influence People.” There, you will learn more about “Fundamental techniques and handling people,” “six ways to make people like you,” “12 ways to win people to your way of thinking” and “how to change people without giving offense or arousing resentment.” In short, you can learn how to manipulate people to sell them something and get what you want.

Let’s now translate this to procurement organizations that are looking to influence stakeholders in order to influence their spend.

The procurement mission can indeed be noble in terms of helping the organization spend less wastefully to free up cash to invest in the enterprise mission. However, from the stakeholder view, what they often hear is “Hi, I’m from corporate procurement and I’m here to help you reduce your spend so that I can claim savings to justify my existence … and then have your budget reduced by corporate finance.”

Do you think the stakeholders like being influenced like this? They end up viewing procurement something like this Dilbert cartoon.

Although the situation is obviously not as bad as a dinosaur leading procurement, it does highlight the disconnect and misalignment that can lead to stakeholders not inviting procurement to the proverbial table. Of course, procurement can get mandated into the process via policy, but those policies are usually fairly toothless, and when procurement does get involved, it is often at the tail end of the process when most negotiating leverage is long gone. This is why the metric of spend under management (SUM) is more about the quantity of late-stage involvement than the quality of early and deep involvement/influence (for more on this topic see our PRO article Procurement KPIs Series (Part 4) — Deep Diving into ‘Spend Under Management’).

This earlier involvement does lead to higher savings in the short term, but you can’t “save yourself to zero,” and procurement’s influence in more strategic business settings where key decisions are made is a work in progress — based on 450 CPOs surveyed last year ...



Improving the situation requires more than sitting at the end of a sourcing process with a catcher's mitt waiting for the stakeholders to come, and having a value proposition that’s more than just transient cost/spend reductions, but something more transformational.

It requires transformative leadership, and that leadership has many elements to it: mission/vision, strategy, empathy, affinity, inclusion, empowerment, enablement, brand, respect, competence (to deliver value), trust, guidance, transformation, collaboration, clarity, coordination/orchestration, protection, agility, intelligence and even inspiration.

These are some of the contexts and the levers of real influence.

In this multi-part Spend Matters PRO series, we’ll explore these elements, how technology can enable them and a case study of a procurement organization that’s pulling these levers likely better than any other organization on the planet.

Making Sense of Supply Risk Management Solutions (Part 4) — Supplier Financial Risk Monitoring Services

In previous installments of this Spend Matters PRO series, we outlined the overall segments of the supply risk management market and then began diving into the supply chain risk management segment and the overall supplier risk management area with a focus on risk management within a supplier management context that sits within the broader area source-to-pay (S2P).

For most procurement leaders though, supplier risk management can be a daunting problem to tackle if looked at truly holistically and strategically — especially when those leaders are not always measured on supply risk. In fact, in a research study that we did a few years ago with over 200 procurement professionals, we found that 53% of them weren’t even measured explicitly on reducing supply risk.

That said, no CPO wants to be caught out if a critical supplier goes bankrupt, and this is why a higher percentage of firms will perform a subset of supplier risk — supplier financial risk monitoring for critical suppliers. In fact, CAPS Research came out with a metric in April citing that 72% of surveyed firms (which tend to be large enterprises) are currently using third-party tools to monitor the financial health of their suppliers. The knowledge of which suppliers are struggling also helps illuminate other supplier performance areas that are likely being impacted: innovation, risk reduction, etc. It’s not just a supplier “death watch.”

These tools (which are really more data services than tools) are the ones that we’ll now delve into. And the timing couldn’t be more critical given what’s happening with the COVID-19 pandemic and the impact that it’s having on so many suppliers right now — especially smaller / private suppliers that don’t have strong capital reserves to weather the prolonged crisis that looks to be hanging around for at least another 12 months.

The market for supplier financial risk monitoring is especially challenging because it’s complex, poorly regulated and not well understood — and this leads procurement leaders to make suboptimal choices (improper scoping, generic sourcing strategies, using “safe”-but-expensive incumbents, etc.) — leaving them underprotected and/or overpaying (sometimes over six figures annually!).

We’ll spend the rest of this installment time helping readers understand this market a little better and how to approach it more deliberately and effectively. We’ll also analyze some of the pros and cons of using various providers’ strategies and specific providers such as Bureau Van Dijk, CreditRiskMonitor, Cortera, Dun & Bradstreet, Equifax, Experian, FICO, RapidRatings and others.

Procurement KPIs Series (Part 4) — Deep Diving into ‘Spend Under Management’

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One of the goals of a business is to have as much spend (with a capital “S” for all expenditures: CapEx, OpEx and COGS) under management as possible. And that goal should be extended out to supplier spend, where procurement wants to have as much supplier spend influence as possible. That way you know what you’re spending on suppliers (and the pricing component of that, of course), what you’re getting from those suppliers (i.e., supplier performance), and how well you’re spending in terms of applying best practices and tools/intelligence to the process (e.g., proactively guiding stakeholders and minimizing maverick spend).

The metric of spend under management (SUM) is actually determined by a set of indicators that we’ll explore in this latest Spend Matters installment of our series on KPIs that all procurement leaders should know. In the first two parts of this KPI series, we highlighted some of the foundational measurements for procurement pros and the problems of traditional procurement key performance indicators in terms of how they can be incomplete, misleading and even damaging to a value chain transformation. We also delved into the “keys” that unlock the value of spend and supply management.

For spend under management, we’ll explore the true spirit of how this metric is used, what role technology plays and how to get a balanced scorecard for different segments of supply base management.

Making Sense of Supply Risk Management Solutions (Part 3) — A Look at 8 Supplier Management Providers

“Supplier management,” often called “supplier lifecycle management,” is an area that procurement practitioners struggle with because of its complexity (as is the intersecting area of supply risk management that we’re covering in this series). Supplier management generally breaks out into two main areas:

  • Extracting value from supplier relationships. This includes supplier performance management (SPM), supplier relationship management (SRM), and supplier quality management (SQM)
  • Protecting that value through supplier risk management (and ancillary supplier compliance management) that we’re drilling into in this series

Note that supplier information management (SIM) is also part of supplier management and manages the core information that supports risk and reward from above — and the information/intelligence requirements for supplier risk management are immense. For more on this definitional stuff that practitioners will find useful as well, see our PRO article here, and from a technology market/provider standpoint, we analyze these supplier management solutions in our SolutionMap vendor rankings and benchmark database.

Part 1 of this Spend Matters PRO series gave an overview of supply risk management solution market, the issues for enterprise risk and the types of solution providers available. Part 2 began our look at nearly 50 providers in this space by comparing four vendors in a key area — supply chain risk management (SCRM).

In this Part 3 of the series, we’ll examine a group of the top-performing supplier management providers, including both “suite” vendors competing in the source-to-pay (S2P) market as well as best-of-breed specialists. Both have a key role to play in the broader supply risk management market. This Spend Matters PRO analysis provides insight into this group of vendors, which we describe as supplier risk management providers. It is the third-part of our series exploring the broader supply risk landscape (which goes beyond supplier risk).

This brief provides an overview of where and how providers like Allocation Network, APEX Analytix, Coupa, HICX, Ivalua, Jaggaer, Procurence and State of Flux “fit” alongside other types of vendors targeting supply risk management. It describes specific solution capabilities they offer and provides examples of common risk use cases.

This PRO analysis also includes a capabilities ratings matrix for supplier risk management of those eight providers, based on the latest SolutionMap dataset from 2020. The vendor ratings matrix compares 10 capabilities, including supply risk, enterprise risk, risk assessments, mitigation planning and regulatory compliance.

While these eight providers are not a substitute for supply chain risk management specialists such as Resilinc, riskmethods and Resilience360 (which we rated on 18 capabilities rather than 10), they provide deeper and essential functionality from a core supplier and entity-level management perspective.

Finally, we should note that while the top-performing providers mentioned above do not represent an exhaustive list of all supplier management providers with capability to support supplier risk management, it is a strong sample as a starting point for those exploring capabilities in this area. Each has something unique to offer — and opportunities to address.

Let’s dive in!

Making Sense of the Supply Risk Management Solution Landscape (Part 2) — Comparing 4 Supply Chain Risk Management Vendors

In Spend Matters’ previous installment of this PRO series, we highlighted the fact that just as there is not a single type of enterprise risk, there is not a single, defined market for procurement and supply chain risk solutions that address these risk elements. We segmented the supply risk market into eight areas that integrated upward into the enterprise risk management (ERM) and the governance, risk and compliance (GRC) space, while also drilling down into some key risk types, spend types, risk processes (e.g., monitoring vs. structural mitigation), and areas like fraud monitoring and contract risk management.

In the remainder of this series, we will explain these different segments and introduce nearly 50 (yes, fifty) providers that help solve various aspects of the supply risk problem. We’ll also offer some advice on how to mix and match these solution providers depending on your objectives and your constraints.

In Part 2, we start by diving right into what is arguably the most important sub-sector within this market — supply chain risk management.

This sector includes providers such as Resilinc, Resilience360 (a DHL spinoff) and riskmethods. Spend Matters PRO will publish individual vendor reviews of these three providers (as well as Prewave) later this summer. But for now, we offer quick introductions to these providers and a ratings matrix to show how they compare — and which of them offer differentiated capabilities.

The vendor ratings matrix compares 18 capabilities, like supply risk, enterprise risk, data sources, category modeling, and visualization. (PRO subscribers can click this post to see the detailed scoring.)

Making Sense of the Supply Risk Management Solution Landscape (Part 1)

Enterprise risk has never been higher.

The COVID-19 crisis has been an accelerant to other enterprise risks, such as cyberthreats, employee health and safety, and most certainly, supply risks affecting suppliers in complex value chains. For procurement and supply professionals, managing this risk is challenging because they might not necessarily get credit for reducing supply risk that they do for reducing supply costs (spend), but risk certainly impacts them and their ability to help the business accomplish its goals.

Herein lies the good, the bad and the ugly. Supply risk management is a two-headed beast:

  • The ability to manage and mitigate RISK within the SUPPLY MANAGEMENT function (i.e., source-to-pay and broader value chain), including within the supplier management process
  • The SUPPLY-side aspect of enterprise RISK MANAGEMENT where enterprise risk and compliance (including to CSR/ESG goals) requirements get extended out to supply chains and third parties (e.g., suppliers!).

The “good” is the ability to extend and integrate enterprise risk/compliance out and back to the external partners that are woven into your business. Supply risk management is intrinsically linked with enterprise risk management by performing supplier risk management processes within the S2P process intrinsically as part-and-parcel of the TPRM (third-party risk management) process that sits within the top level ERM (enterprise risk management) and GRC (governance, risk and compliance) processes. Or put another way, if you’re going to reduce enterprise risk, you need to extend your risk management processes outside the four walls to your trading partners — and make sure that your internal stakeholders are aligned in that effort for business continuity planning (BCP).

As such, the “bad/ugly” aspect of poor alignment is the inability to execute these aligned processes given the fragmented terminologies, methodologies, regulations, stakeholders and solution providers/markets vying to help solve these issues.

We can’t delve into all the organizational issues here — e.g., the philosophical/religious battle of whether ERM or GRC is the best top-level methodology; or where sustainability best slots in; or who should own TPRM organizationally (GRC? Procurement? Both?) Regardless, when you start “connecting” the dots across (and within) these domains, you’ll see the potential linkages that are needed — and how many are lacking. For example, very few procurement organizations have helped establish a “single face to the supplier” via a supplier portal that integrates these various risk areas in IT, GRC, legal, etc. (i.e., beyond just a basic procurement/AP registration portal with some basic risk functionality). It’s a technical challenge and an organizational challenge.

We see many of our practitioner advisory clients struggle with how to unify all of these stakeholders and systems — and also just getting the funding needed to do so. They also struggle with what types of providers are appropriate to consider beyond the traditional silos or “lanes.”

In this Spend Matters PRO series, we’ll present a framework for supply risk management that not only is segmented to meet the objectives of supply-side professionals, but also integrates into the higher-level enterprise risk/GRC areas — and simultaneously reflect the current state of solution/services providers. This mega mashup market is messy because there’s a lot of provider overlap and also because of changing dynamics between SaaS solution areas — and because of changing provider market dynamics around content aggregation, analytics-derived intelligence (which is increasingly based on large communities of users and purpose-built machine learning algorithms), risk scoring methodologies and other areas.

Part 2 looks at four of the nearly 50 vendors that we'll introduce in this space.

Part 3 looks at eight supplier management providers.

Getting Real and Resilient in Direct Procurement Execution

Direct procurement execution area (i.e., e-procurement for direct) has been crying out for better technology for over 40 years, and it’s actually much more complicated than you’d think.

I’ll dive into this in future analyses, but one interesting provider that I checked out recently is SourceDay.

Despite the name, it’s not a strategic sourcing player, but rather focuses on direct procurement collaboration/execution (see our Spend Matters PRO analysis on SourceDay here). My colleague Nick Heinzmann also wrote up a nice piece on how COVID-19 was impacting the customers of this scrappy 70-person firm out of Austin, Texas.

I spent some time demo’ing its product, and it’s definitely on the right track in attacking this area.

Modernizing the healthcare supply chain in the coronavirus era

healthcare

The COVID-19 crisis shook almost every industry globally, but the healthcare system was forced to adjust in real time.

Spend Matters’ Chief Research Officer Pierre Mitchell recently spoke with Karen Conway, Global Healthcare Exchange (GHX) Vice President of Healthcare Value, about the issues that hospitals faced with their supply chains, and how the industry has learned from its past mistakes.

“One of the first things I did when the crisis broke was to review lessons learned from past outbreaks: SARS, H1N1 and Ebola. In all, the supply chain was noted as one of the biggest challenges,” she said.