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.


Prewave: Vendor Analysis — Solution & Platform Overview, Vision & Roadmap, Market Analysis and Analyst Assessment

Prewave

This Spend Matters PRO Vendor Analysis provides an overview of the supply intelligence provider Prewave, its solution, technology, value proposition and position in the marketplace.

The COVID-19 pandemic has clearly highlighted the danger of losing visibility of upstream supply conditions. Many critical suppliers have been threatened by severe demand reductions and internal operational challenges (including their own supply assurance and business continuity challenges). And while 2020 was a year that nearly everyone wants to forget, some organizations did see a silver lining, including those who provide solutions related to supplier/supply chain risk and compliance (including software, services, data and intelligence).

Supply risk solutions have two main risk management areas: supplier risk and physical supply chain risk (that affects supplier sites and the supply lines between nodes in the supply network). But although these are separate/overlapping, they both have a singular need for supply intelligence that integrates with the risk management workflows and analytics (e.g., supply network modeling, risk modeling, scenario planning, risk monitoring/alerting, risk mitigation and recovery planning/execution via “playbooks”).

This “outside-in” intelligence capability is about curated supply market intelligence that is explicitly mapped to a company's specific risk profile and multi-tier inbound supply chain to help identify threats to critical supply lines and improve supply chain agility and resilience. Supplier-specific intelligence is also important for monitoring critical suppliers from a broader lens of sustainability, social responsibility and industry-specific GRC issues.

Such supply intelligence can be hand-built by the buying organization, but there’s no economies of scale via network/community effects. This is why buyers are considering using third-party supply risk intelligence providers that can integrate such intelligence into those buyers’ existing supply risk and supplier management processes and applications.

One of these providers is an Austrian start-up named Prewave (and one that we’ve recently named in our 2020 “Future 5” list of procurement tech start-ups). Prewave isn’t a full supply risk management application suite, but rather, a supply chain risk intelligence provider that uses trained machine learning models to identify potential risks that are likely to be relevant to a firm’s suppliers and associated supply network.

Coupa and complexity: Acquisitions, tech integration and customer issues

As veteran industry analysts in this space, we closely watch procurement technology developments — engaging with solution providers, their customers, implementation consultants and the broader market. Coupa’s aggressive M&A activity over the last couple of years (four this year alone) has shifted the market landscape, but also the Coupa solution landscape for its current customers.

We’ve covered Coupa since it was a scrappy start-up with a really simple, easy-to-use solution at a very low price point. Now it is integrating all of its acquisitions to fulfill Coupa’s vision for business spend management (BSM).

Simplicity was really important to Coupa. Yet, with growth comes complexity, and after a series of major acquisitions, some customers that we’ve spoken with aren’t seeing a fully integrated, simpler solution.

In this Spend Matters PRO piece, we’ll explore:

  • How Coupa is facing integration issues stemming from its strategy of increasingly larger acquisitions
  • The issue of master data fragmentation (with supplier master data in particular) on workflow and analytics — and on a common supplier portal interface
  • Coupa’s expansion beyond spend management into supply chain management
  • Our point of view on Coupa’s continued growth strategy through acquisitions

Spend Matters is making this piece available outside of a PRO subscription for procurement practitioners. Please email pierre@spendmatters.com for your copy.

Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation (Part 8) — Beyond Continuous Improvement

This is the last of our multi-part Spend Matters PRO series on transformation, focusing not just on digital procurement transformation, but also a broader supply-aware transformation of the value chain and the business (i.e., spend management and supply management improve business management). In the previous installment, we covered:

  • How procurement can use an empathetic, but deliberate, design-centered approach to align with stakeholders and meet them where they are at their many “tables” (albeit virtually given the pandemic)
  • The importance of a well-articulated procurement mission and “brand” that coherently communicates and speaks to the business stakeholders, rather than just being a technocratic procurement strategy that simply executes a narrow value proposition.
  • Pathways for procurement to be a little more proactive and structured in its transformation approach.
  • How procurement can formally “guide” a best-practices spend/supply management process supported by technology that goes beyond tactical “guided buying” processes.

We also featured our procurement adaptation of Amazon’s flywheel (and Covey’s influence model for good measure) before laying out a five stage transformation model with embedded recommendations and emerging techniques and tools that can help on the transformation journey.

But, there is still a chapter to be written here, and it deals with the problem of “the final mile” that links the procurement strategy and transformation to the actual projects in the trenches. When there is poor linkage, here are some of the issues:

  • Individual projects are considered in isolation without looking at the bigger picture relative to strategy and to other projects
  • Steady state processes are increasingly rare in today’s increasingly volatile environment, but yet, change management is still difficult to estimate and execute
  • The use of ‘wave planning’ for prioritizing sourcing projects (i.e., plotting impact vs. effort) is a noble goal, but the technique is less widely adopted across processes, and the methodology for estimating the effort is usually fairly crude
  • Speaking of sourcing, too often, the sourcing “intake” process is fairly reactionary and tactical in nature when in fact the opportunities could be made more strategic and transformational if they were better anticipated and coordinated with other efforts
  • Too much picking of low hanging fruit projects (i.e., strip mining for savings) without building “transformational muscle” makes it harder to attempt picking the higher hanging fruit with more complex cross-functional (and cross-enterprise) projects

In this last installment, we’ll share a simple five-step transformation project evaluation and implementation process that can be used for digitally intensive projects (or not), strategic projects/programs (or incremental improvements), and for cross-project transformation roadmapping. It will utilize 15 dimensions that can be used to estimate a degree of difficulty for specific projects (e.g. to help plot that wave chart discussed earlier) or for the broader transformation.

Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation (Part 7) — Blueprinting the Transformation

In this multipart Spend Matters PRO series, we’ve outlined how procurement can move beyond traditional spend influence tactics to add more value to the business and thereby relevant procurement value as well.

In this installment, we will summarize and review the previous lessons that highlighted some of these engagement examples, and will then pull up a level to reflect on what these transformation examples have in common. And then we’ll preview a transformation framework that can provide some practical guidance.

Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation (Part 6) — Transforming the Supply Network

In the previous two installments 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 mechanistic BOM-based sourcing workflows to also focus on revenue uplift, supplier innovation and “design for supply” use cases.

In this installment, we will finish our coverage of how procurement (with the help of its functional partners) can enable the product/service lifecycle and the end-to-end supply network. And then we’ll wrap up this series on some transformation lessons learned in turning episodic moments of procurement influence into a more systematic evolution of procurement value.

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. For Part 5, we dug into what it takes to create strategic supply partners and also consider the technology vendors needed for extended supply networks.

Now let’s look more into procurement’s role in transforming supply networks.

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

market intelligence

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’

market intelligence

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.