Author Archives: Tom Finn

Almost overnight it seems that the supply risk management (SRM) solution area has exploded with new options. Available solutions fall into a range of categories. On one end of the spectrum, technology suite vendors are adding basic supplier risk functionality, providing what amounts to a starter package for procurement organizations to quickly “risk categorize” their suppliers. While solutions like this may lack the feature and monitoring depth that more advanced procurement and supply chain organizations may require, they deliver a combination of integrated ease of access and use that can be difficult to pass up as an add-on to existing capabilities.

At the other end of the spectrum, more advanced supply and supply chain risk management solutions now provide multiple dimensions of insight through integrated software and content packages that can stand on their own as an independent solution area separate from traditional “source-to-pay” suites and modules or integrate with existing systems. These types of solutions, which include LexisNexis Entity Insight (LNEI), the subject of this analysis, are typically best suited for procurement and supply chain management teams where risk management practices and solution requirements are well developed or more strategic.

This Spend Matters PRO Vendor Snapshot provides facts and expert analysis to help procurement organizations make informed decisions about LNEI and whether its solution is a fit for their supplier and supply chain risk management needs. Part 1 of our analysis provides company background information and a solution overview, as well as recommended fit suggestions. The remaining parts of this research brief will cover product strengths and weaknesses, competitor and SWOT analyses, and insider evaluation and selection considerations.

Although he surely wasn’t the first to point it out, Warren Buffett grabbed the market’s attention when he described healthcare as a “tapeworm on the U.S. economy.” In fact, his voice carried enough weight to trigger a stock market selloff. Interestingly, not even Walmart’s actions, along with those of other major retailers, have garnered similar attention. Combined, they have quietly opened thousands of healthcare clinics for the past several years. But unlike CVS, Rite Aid, Kroger and other pharmacy and grocery chains, Walmart has effectively positioned itself as a true primary care provider, capable even of treating patients with chronic diseases.  

Truckload contracting is a fragmented market in dire need of better management tools. But is that why as much as 25% of all road miles are still being driven empty? A new company called LogisticsExchange (LE) has taken an entirely fresh look at that question. Interestingly, here’s where it has landed: It is attacking the industry’s traditional contracting practices.

Joining a GPO is like getting a Costco membership. You know you’re not going to get ripped off, so you probably won’t put much thought into joining. But therein lies the rub for GPO members. Like Costco, a GPO is a one-size-fits-all marketplace where you may overbuy when you get there or underbuy by not getting there at all.

In an increasingly Amazon-dominated world, however, this model is not the only available option.Today, the assortment and pricing of items available to consumers are tuned to the user and monetized most efficiently by intermediaries that can source better and optimize for lowest total landed costs better than individual buyers. Procurement organizations are now looking to bring this experience to the complex world of B2B purchasing. And where GPOs fit into this more sophisticated equation is not a simple answer (many are still trying to figure it out themselves). 

But that doesn’t mean GPOs will go the way of the 1980s big box retailer. Instead, GPOs will have to take on a role beyond the race to the lowest price. This multipart Spend Matters PRO series explains what motivates GPOs and helps procurement organizations best decide when and how to engage them. In this second installment (see our initial GPO introduction), we explore GPOs from a supplier perspective and offer recommendations for vendors working through GPOs to make these relationships more successful. We also explore how GPO options and capabilities are evolving and segment the GPO market by model and type and provide case example looks at different GPO business models. These include vertical/industry independent, member-owned, horizontal, affinity, category-specific and procurement technology led GPO models. 

The purpose of almost every business contract is the same: to define the relationship and allocate risk. To effectively do the latter, supply chain managers must manage external risks and internal risks. But even considered separately, the point is that managing both kinds of risk is challenging. With a plate that full and interdependent, is it any wonder that contracts seem to create more operational friction than they’re worth? Why haven’t we figured out that we can’t adjudicate such variability?

Group purchasing organizations (GPOs) are not a new idea. Agricultural cooperatives aggregated the buying power of farmers hundreds of years ago. That said, GPOs have evolved quite a bit, and the infusion of new digital capabilities is taking that evolution to an even higher level. This evolution also means that procurement organizations must go in “eyes wide open” to best utilize this important tool in the procurement tool belt.

Not all GPOs (or GPO models) are the same. Understanding the differences will make you a more educated, and thus likely more successful, buyer. Therefore, we’ve decided to delve a little deeper into this obscure sector of the procurement provider market and shed some light on how to best extract value from it.

This multipart Spend Matters PRO brief is designed to demystify GPOs and put procurement organizations on the same information playing field as the GPOs attempting to sign them up, expand their utilization of contracts and sell additional services. Within this series, we will explore GPOs by type, as there are several business models in play, and by industry segment, as GPOs are heavily embedded in certain markets and are little more than a supply option in others.

This first installment in our GPO coverage:

• Defines what GPOs are (and are not)
• Explains how GPOs operate
• Explores GPO “spend coverage and fit”
• Analyze the GPO market segments and how to engage them
• Offers tips and tricks for engaging GPOs based on their own constraints/models
• Provides both basic and advanced takeaways for procurement organizations that are thinking through GPOs as an alternative supply option
• Offers a checklist of activities to consider when sourcing GPOs

Alfred Hitchcock provided a great definition of the difference between surprise and suspense. It goes like this: If a bunch of guys are playing poker and a bomb goes off under the table, that’s a surprise. If, however, we know that the bomb is there and we watch the timer tick down while the men play on, that’s suspense. When Warren Buffett said that the ballooning costs of healthcare “act as a hungry tapeworm on the American economy,” the financial markets acted like a bomb went off and the media covered the story like none of us knew it was there. Let me save you the suspense: egregious profiteering in the medical-industrial complex is the head of the tapeworm that Buffett spoke about.

These days especially, there’s an unlimited supply of hotly politicized topics perfectly suited to make sure we talk past each other — and learn nothing. Healthcare provides numerous examples. For example, President Trump got a rise out of the Brits last week tweeting barbs at its beloved National Health Service (NHS), a topic which, by his own account, he knows little about. Trump zeroed-in on a recent NHS protest and sparked a backlash saying that the “NHS is going broke and not working.” The protest he referenced, interestingly enough called “NHS in crisis: Fix it now,” was organized by the People's Assembly and Health Campaigns Together. The movement is supported by most all of the U.K.’s largest unions.

Pause for a moment to consider how adept the NFL has proven itself at proactively addressing logistics and risk management. Whether we’re talking facilities, security, transportation or emergency services, there’s obviously a lot more behind the curtain than we know about. Suffice it to say that little imagination is required to accept that the NFL sets an interesting, if not teachable, example — not just in terms of how to pull off a mega-event but how to react to most anything that could possibly go wrong. It expects problems and is prepared for them.

As reported earlier this week, Amazon, Berkshire Hathaway and JPMorgan have announced a partnership to cut health costs. Apparently, the partnership won’t be Amazon-led but rather an independent company that will operate “free from profit-making incentives.” What does that mean? My best guess is that the new entity will deliberately bear no resemblance to the current group purchasing organization (GPO) supplier-paid fee model.

Procurement doesn’t have customers, it has prisoners. Although the statement is paraphrased (borrowed from sentiment long associated with enterprise software companies), does our profession deserve such criticism. Is it fair? Let’s face it, when it comes to driving innovation, procurement’s less than stellar reputation is well earned. Its inability to act as an intelligent and informed customer of the would-be innovator is generally so bad that companies have established separate offices dedicated to the practice. And here’s the rub. What do these innovation offices typically cite as their single biggest obstacle to success? You guessed it: internal procurement. We’ve got to fix this.

There’s been a lot of talk about “healthcare consumerism” lately. Is it really about increasing competition among insurance providers? As the acute care market continues to consolidate and vertically integrate, aren't the insurance pickings for most of us getting conspicuously slim, especially if employers are making our coverage decisions? Here’s where I’ve landed: If healthcare consumer advocates are relying on insurance companies to drive “consumerism,” then they’ve put the cart before the horse. My money is on the jockey, and the jockey in this race is good old-fashioned consumer preference.