Procurement Strategy & Planning Content

Coronavirus disruption spurred North American manufacturers to rethink supply chains in Asia, Thomas Industrial survey finds

Global Risk Management Solutions (GRMS)

A snapshot of the manufacturing sector about a month ago gives a view of how much disruption the coronavirus outbreak has caused and how much more is to come, according to the March 2020 report from the Thomas Industrial Survey. And in any other time, dire news about the price of oil would be driving more economic concern.

Dear Procurement: In coronavirus era, carpe diem with tech from your sofa!

Spend Matters analyst Michael Lamoureux tells how procurement pros can do their high-level work from home with the latest technology. Cloud-based solutions — and I’m not just talking about Zoom — can help turn your sofa or kitchen table into a mobile procurement command center to handle category planning, vendor site audits, user groups & workshops, and internal category, supplier and market intelligence.

CORONAVIRUS RESPONSE: Supply Risk — Mitigating and Recovering from the Grey Swan of COVID-19 [PRO]

supply risk

The mission of our “Coronavirus Response” series is to examine categories of relevant solutions and example providers that professionals in procurement, finance and supply chain organizations should investigate to reduce coronavirus supply risk.

We’re calling the pandemic a “grey swan” because pandemics are not unknown risks. If you look at the 2019 World Economic Forum Global Risk report, the “risk of infectious disease” came in last on the top 10 list in terms of impact and didn’t make the list in terms of probability. But, it’s on the list, as the report states:

Each month the World Health Organization (WHO) tracks 7,000 new signals of potential outbreaks, generating 300 follow-ups, 30 investigations and 10 full risk assessments. In June 2018 there were — for the first time ever — outbreaks of six of the eight categories of disease in the WHO’s “priority diseases” list. If any had spread widely, it would have had the potential to kill thousands and create major global disruption.


And guess what was included in those eight categories: Middle East respiratory syndrome coronavirus (MERS-CoV) and severe acute respiratory syndrome (SARS).

And if you look at some of the nearest risk types on the risk map, you’ll find:

  • Fiscal crisis
  • Food crisis
  • Unemployment and underemployment
  • Failure of financial mechanism or institution
  • Failure of national governance
  • Critical information infrastructure breakdown

Do these sound familiar? The report also shows how many risks are highly interconnected, and there’s a thread that runs through most of them: supply chains. Supply chain folks’ ears perk up given how often the term “risk” is uttered these days, and unfortunately not in a good light (note the last three risks in the list above). And those supply chains are highly interconnected global flows of goods, humans and machines — and viruses that can jump along for the ride. When the information systems/silos and governing systems/silos fail, that’s when the swan kicks your butt (which is in character for a swan, actually).

When corporations and governments alike don’t learn from the past, then the pain of previous risk events fade, defenses drop, preparedness falters and supply chains lose their protections which is shown well here (courtesy of Resilinc):



(Click image to enlarge)

This situation is why today’s brief focuses on supply risk management, the first of our seven procurement-centric solution categories that we’re covering:

  1. Supply risk management solutions that include supply chain risk, CSR risk, supplier financial risk, etc.
  2. Sourcing and commodity management, including advanced sourcing, direct sourcing, automated supplier discovery, and commodity management to help dynamically plan and source. (See this category’s recommended solutions for direct sourcing here.)
  3. Advanced procurement analytics to enable direct procurement and/or to perform “spend planning” when demand drops out or spikes. (Its profile for this series is here.)
  4. Procure to Pay (P2P) that emphasizes working capital, dynamic discounting, payment control and related finance priorities to help inject cash into the P2P process — especially for many cash-starved suppliers. (This category is discussed in-depth here.)
  5. Fraud, P2P and vendor management safeguards when new suppliers need to be set up quickly, and also when lowlife fraudsters try to use the pandemic as a way to steal money and IP. (Its profile for this series is here.)
  6. Providers with deep contract analytics that can analyze a contract portfolio for affected contracts from suppliers (and customers) for not just force majeure clauses, but other related clauses that tie to the multiple risks popping up at once in the pandemic.
  7. Contingent Workforce and Services solutions that are able to, at a minimum, help rapidly ramp up on-demand workers to deal with massive resource shortfalls. We are looking at four categories of solutions: for sourcing remote/online work; solutions for sourcing and managing contract workers at geo-specific capabilities; solutions to “direct source” and manage contract workers; and solutions for data management and analytics. (The first PRO brief from this category, about sourcing remote/online work, can be read here.)

Broader supply chain issues and solutions are also clearly in play, especially related to inventory visibility, inventory positioning, demand forecasting, capacity planning, logistics planning/execution, distribution/allocations, global trade management, product design, the internet of things (IoT) and so on.

But, even though the initial seven use-case categories and solutions are only addressing a subset of the issues, the ability to respond intelligently in the short term can also help set organizations up for the future as we get back up and running.

In this installment of our Coronavirus Response series, Spend Matters will explore supply risk management, which includes supplier risk management, but also the broader area of supply chain risk management (SCRM) that seeks to keep critical supply lines flowing. In the case of COVID-19, these supply lines include the critical components/materials (and supporting manufacturing and logistics networks) that:

  • get assembled into the ventilators that keep sick patients alive while this viral plague sweeps through
  • are used to manufacture the personal protective equipment (PPE) that critical health care workers need to protect themselves
  • support the pharmaceutical and medical device/supplies supply chains that create the products that diagnose and treat the disease with therapies and vaccines — as soon as possible!
  • build “pop-up” hospitals and everything in them needed to treat patients, who could flood in and overwhelm healthcare workers

Broader supply risk management also includes:

  • Understanding demand-side risk when demand falls off the table when 80% of populations are sheltering in place in the short term. The demand (or lack thereof) also ripples up the supply networks and service networks — especially to smaller suppliers.
  • Considering the supply risk of contingent workers who will be critical “flex capacity” to support the physical supply chains of foods, medicines, equipment, etc. We’re covering this more here and here).
  • Financial risk that occurs when suppliers, especially smaller one with thinner margins, are starved for cash as liquidity slows in a risk-averse market of cash-strapped buyers and cautious financial-services lenders.

Specialized supply risk management solutions and services providers can support the above requirements and help to answer a range of questions, such as:

  • What countries does my company do business in with suppliers at the tier one level? Tier two? Tier three? Which of these should I prioritize as truly critical?
  • Which suppliers are affected by COVID-19 within these regions? How badly are they affected? How can we find out quickly?
  • What are my products and revenues that will be affected? And what should I do about it? Do I have playbooks defined, and if so, how do I execute (and if not, how do I create them when this horror show has died down)?
  • How is my logistics network affected directly by COVID-19 (e.g., port/warehouse slowdowns and strikes) and how is it impacting my freight? What transportation lanes are impacted to see if my freight is impacted? Can delays or other risk factors be expected further down the inbound supply chain before it reaches my facilities? For example, West Coast ports were starving for container ship capacity because so many ships are idled in China in quarantine conditions. Now, as air freight capacity is impacted by massively reduced passenger flight volumes (and respective cargo capacity lying underneath), what are my expedited freight options?
  • Is there anything I can do if suppliers are individually high-risk? Will they be financially threatened because of COVID-19? How can I get visibility into their financial health, especially if they’re privately held?
  • Which of my affected suppliers are potentially unsustainable in their supply risk practices rather than just their traditional CSR practices?

For the supply chain risk management (SCRM) scenarios and questions listed above, we’ll discuss the best-known specialists in the area: Riskmethods and Resilinc. But we’ll also touch on Resilience360, which has unique capabilities within the broader supply network vis a vis the logistics network. Sourcemap also has some supply network visualization and risk modeling/monitoring capabilities, but hasn’t been drawn into the healthcare supply chains like the others (although the CPG supply chain has also been affected — as any toilet paper shopper has discovered!). Elementum doesn’t have its own native SCRM solution (it partners with Resilinc), but it does offer a command center solution that it is now providing as a freemium “virtual war room” offering.

These specialized providers don’t have to be your only choice however. For example, we’ll cover what Sievo (a broader procurement analytics provider with roots in spend analytics) is doing with an evolving “mash-up” solution that provides a view into spending, the supply network, risk overlays, etc. Simfoni similarly has a COVID-19 risk assessment dashboard solution that it is offering for free. We’re not sure how long it’ll allow free usage, but the website page for the offering has a slick little Power BI dashboard that you can interact with that gives a flavor of its capabilities.

In terms of supplier risk management, we will cover this as we expand our coverage to broader supplier management later (and supplier/third-party management is clearly a foundational process to any procurement organization), but the one aspect that we will initiate coverage on now is supplier financial risk management. Although the credit bureaus and traditional supplier risk evaluators / content providers like D&B offer some insights into supplier financial risk that we’ll add to our coverage later, we’ll touch on two providers, Rapid Ratings and Credit Risk Monitor, who can help assess supplier financial health for critical suppliers. LexisNexis offers broader supplier risk management capabilities, but you can check out its free COVID-19 coverage from a legal perspective over at Law360.

As a side note, there are requirements here for performing the sourcing and commodity management activities required to rapidly identify new sources of supply, conducting complex sourcing events for materials, parts and components (which may be tied to broader bills of material), qualifying suppliers based on targeted requirements (e.g., for a specific line), and managing and tracking suppliers based on custom scorecarding. We cover this area (No. 2 of our list above) here, and we also explore the demand-side volatility scenarios/analytics here (No. 3 from the list above).

Let’s jump into how supply risk management can help.

Through April 2020, a special PRO Expert Survival Pack is available to procurement practitioners only* at up to 50% off — Learn more

As the coronavirus crisis hurts cash flow, Corcentric advises to focus on tech solutions that help people

The coronavirus outbreak has required a sweeping plan of social distancing to stem its spread, and people have responded by staying home and limiting their exposure to others. That helps public health, but it is disrupting businesses around the world.

With unprecedented shocks to supply and demand across most industries, businesses will need help with finances as the crisis disrupts cash flows and constrains working capital. The shuttering of offices across the world is also compromising back-office AP and AR processes — especially for those behind the curve in automation.

To learn more about how businesses can keep their doors open and their trucks rolling, we talked with the procurement technology provider Corcentric about what it’s seeing as it helps clients handle transactions, pay suppliers and get paid with solutions like supply chain finance (SCF).

“Corcentric hopes that every business understands this situation first as a human problem. ... Approach your customers from the perspective of solving professional problems to help their personal lives.”

Click to read the full Q&A.

CORONAVIRUS RESPONSE: Fraud, P2P and Vendor Management Safeguards — Protecting cash and rapidly vetting suppliers in a crisis [PRO]

In this installment of our “Coronavirus Response” series, Spend Matters will explore fraud, P2P and vendor management safeguards. With the COVID-19 crisis creating new fires for procurement to put out and critical supply risks arising to address, fraud is an unfortunate reality that businesses need to remain on guard against — especially in times where bad actors mobilize to take advantage of distracted and newly remote operations. This PRO brief will focus on the first three solution providers that we’ll profile in this category: AppZen, ConnXus and APEX Analytix.

The mission of this series is to examine categories of relevant solutions and example providers that professionals in procurement, finance and supply chain organizations should investigate to reduce, and even mitigate, coronavirus supply risk. And even if the solutions are only addressing a subset of the issues, the ability to respond intelligently in the short term can also help set organizations up for the future when sanity returns to the world.

Today’s brief focuses on the fifth of the seven solution categories that we’re covering:

1. Supply risk management solutions that include supply chain risk, CSR risk, supplier financial risk, etc.
2. Sourcing and commodity management, including advanced sourcing, direct sourcing, automated supplier discovery, and commodity management to help dynamically plan and source. (See this category’s recommended solutions for direct sourcing here.)
3. Advanced procurement analytics to enable direct procurement and/or to perform “spend planning” when demand drops out or spikes. (Its profile for this series is here.)
4. Procure to Pay (P2P) that emphasizes working capital, dynamic discounting, payment control and related finance priorities to help inject cash into the P2P process — especially for many cash-starved suppliers. (This category is discussed in-depth here.)
5. Fraud, P2P and vendor management safeguards when new suppliers need to be set up quickly, and also when lowlife fraudsters try to use the pandemic as a way to steal money and IP.
6. Providers with deep contract analytics that can analyze a contract portfolio for affected contracts from suppliers (and customers) for not just force majeure clauses, but other related clauses that tie to the multiple risks popping up at once in the pandemic.
7. Contingent Workforce and Services solutions that are able to, at a minimum, help rapidly ramp up on-demand workers to deal with massive resource shortfalls. We are looking at four categories of solutions for sourcing remote/online work; solutions for sourcing and managing contract workers at geo-specific capabilities; solutions to “direct source” and manage contract workers; solutions for data management and analytics. (The first PRO brief from this category, about sourcing remote/online work, can be read here.)

Owing to the magnitude of the crisis, Spend Matters recently made the series introduction available for free to all readers. PRO subscribers can see our follow-up pieces that profile the other categories and their solutions in that market. We will include a lot of information on each category PRO brief that readers can see without hitting a paywall, but since we also draw heavily from our existing deep-dive analysis of the providers from our SolutionMap database, some information will be available only to our PRO subscribers.

For fraud and vendor safeguards, the immediate need for companies in all sectors will include proactively detecting fraudulent behavior from all possible sources, whether it’s employees abusing normal corporate channels (e.g., stocking their own homes with toilet paper on the company dime) or cybercriminals posing as suppliers to reroute payments into personal bank accounts. At the same time, manufacturers may need to identify new sources of supply, leading them to rapidly onboard new suppliers. Yet without proper safeguards in place, a frantic selection could lead to longer-term problems, should the supplier have past issues with regulatory compliance or run an unsustainable operation.

The initial three solutions — from AppZen, ConnXus and APEX Analytix — all have capabilities in proactive fraud detection or supplier risk management, especially as it pertains to the validation of supplier information. We will likely add providers with similar and other strengths in fraud detection and vendor risk management at a later stage.

Each category-specific PRO piece in this series has three sections:

1. Problems and Use Cases. We’ll highlight the problems in force (which will vary through different phases of the crisis) and the various scenarios where solutions can provide deeper insights, intelligence and scalable workflows.
2. Solution Rationale and Value. We’ll outline how various solutions can help solve the problems and the specific questions that they’ll help answer.
3. Example Providers. We’ll highlight the solution providers that can support the problems and deliver value.

Some providers are offering coronavirus-specific programs and “freemium” commercial offers, and we’ll note those whenever we update this piece. We’ll also start the series with providers that we already have deep knowledge on, but we’ve been seeking information from other vendors too.

Let’s jump into how fraud and vendor safeguard solutions can help.

Through April 2020, a special PRO Expert Survival Pack is available to procurement practitioners only* at up to 50% off — Learn more

Coronavirus forces Coupa to move Inspire event to fall

Updated April 2 with more details about the event location.

Because of the coronavirus crisis, Coupa is the latest solution provider to reschedule its spring customer event, and new dates in the fall are being confirmed for Inspire North America, according to Coupa’s website.

The original event was scheduled for Las Vegas, but other sites are being explored for the fall event.

CORONAVIRUS RESPONSE: Sourcing and Commodity Management — Securing direct materials during the crisis and recovery phases [PRO]

In this installment of our “Coronavirus Response” series, Spend Matters will explore sourcing and commodity management, with a focus on direct materials. With COVID-19 impacting logistics and existing supply bases, in China (even though China seems to be recovering), the rest of Asia and Europe (thus far), there will be numerous emerging needs for companies across manufacturing. This PRO brief will focus on the first three solution providers that we’ll profile in this category: Allocation Network, Coupa and Jaggaer.

The mission of this series is to examine categories of relevant solutions and example providers that professionals in procurement, finance and supply chain organizations should investigate to reduce, and even mitigate, coronavirus supply risk. And even if the solutions are only addressing a subset of the issues, the ability to respond intelligently in the short term can also help set organizations up for the future when sanity returns to the world.

Today’s brief focuses on the second of the seven solution categories that we’re covering:

1. Supply risk management solutions that include supply chain risk, CSR risk, supplier financial risk, etc.
2. Sourcing and commodity management, including advanced sourcing, direct sourcing, automated supplier discovery, and commodity management to help dynamically plan and source.
3. Advanced procurement analytics to enable direct procurement and/or to perform “spend planning” when demand drops out or spikes.(Its profile for this series is here.)
4. Procure to Pay (P2P) that emphasizes working capital, dynamic discounting, payment control and related finance priorities to help inject cash into the P2P process — especially for many cash-starved suppliers. (This category is discussed in-depth here.)
5. Fraud, P2P and vendor management safeguards when new suppliers need to be set up quickly, and also when lowlife fraudsters try to use the pandemic as a way to steal money and IP.
6. Providers with deep contract analytics that can analyze a contract portfolio for affected contracts from suppliers (and customers) for not just force majeure clauses, but other related clauses that tie to the multiple risks popping up at once in the pandemic.
7. Contingent Workforce and Services solutions that are able to, at a minimum, help rapidly ramp up on-demand workers to deal with massive resource shortfalls. We are looking at four categories of solutions for sourcing remote/online work; solutions for sourcing and managing contract workers at geo-specific capabilities; solutions to “direct source” and manage contract workers; solutions for data management and analytics. (The first PRO brief from this category, about sourcing remote/online work, can be read here.)

Owing to the magnitude of the crisis, Spend Matters recently made the series introduction available for free to all readers. PRO subscribers can see our follow-up pieces that profile the other categories and their solutions in that market. We will include a lot of information on each category PRO brief that readers can see without hitting a paywall, but since we also draw heavily from our existing deep-dive analysis of the providers from our SolutionMap database, some information will be available only to our PRO subscribers.

For sourcing and commodity management, the emerging needs for companies across manufacturing will include rapidly identifying new sources of supply, conducting complex sourcing events for materials, parts and components (which may be tied to broader bills of material), qualifying suppliers based on targeted requirements (e.g., for a specific line), and managing and tracking suppliers based on custom scorecarding.

After the pause button is lifted on production — in cases where one is put into place — these needs will become especially acute during the recovery phase in specific regions (which may be different from the recovery phase in other geographies).

The initial three solutions — from Allocation Network, Coupa and Jaggaer — all have capabilities in advanced sourcing for direct materials and/or strong support for scenario modeling and optimization. We will likely add providers with similar and other strengths in sourcing and commodity management at a later stage.

Each category-specific PRO piece in this series has three sections:

1. Problems and Use Cases. We’ll highlight the problems in force (which will vary through different phases of the crisis) and the various scenarios where solutions can provide deeper insights, intelligence and scalable workflows.
2. Solution Rationale and Value. We’ll outline how various solutions can help solve the problems and the specific questions that they’ll help answer.
3. Example Providers. We’ll highlight the solution providers that can support the problems and deliver value.

Some providers are offering coronavirus-specific programs and “freemium” commercial offers, and we’ll note those whenever we update this piece. We’ll also start the series with providers that we already have deep knowledge on, but we’ve been seeking information from other vendors too.

Let’s jump into how sourcing and commodity management can help.

Through April 2020, a special PRO Expert Survival Pack is available to procurement practitioners only* at up to 50% off — Learn more

Coupa CEO implores procurement pros to lead businesses through the coronavirus crisis

Spend Matters welcomes this guest post from Coupa CEO and Chairman Rob Bernshteyn, whose letter about procurement’s role in tackling the coronavirus crisis originally appeared on LinkedIn.

It's been a long time coming, and no one wanted it to occur under these circumstances, but procurement is now a primary focus of attention at your company. It’s time to show everyone what you can do. Your company is asking for you and your department to step up like never before, under the tremendous pressure we are all under, and lead. Specifically, you can provide leadership in at least four key areas right now.

Scanmarket CEO: Coronavirus crisis is forcing companies to identify an array of business risks

The coronavirus outbreak has made online work more vital than ever, and with all of the digital transformation and increased use of procurement technology, vendors have more visibility into what’s actually going on with businesses, which even during this crisis must remain focused on serving clients while their own personnel work from home — sometimes in cities and countries under lockdowns.

To get the pulse of what’s happening, we got in touch with e-sourcing specialists Scanmarket, a company that’s facing both of those pressures. The cloud-based provider operates globally but has its core group in Denmark, one of the first countries to institute a nationwide lockdown.

In any crisis, businesses’ timelines for answers speed up and priorities change. So we talked with Scanmarket CEO Betina Nygaard to get some insight on how the crisis is unfolding and how businesses are addressing all of the risk they’re facing.

Coronavirus-era advice: Tips on asking suppliers for payment-term extensions and other concessions

Disruption from the coronavirus outbreak is forcing some tough conversations about payments.

It’s never an easy topic, but asking suppliers for concessions on a call or video chat in an empathetic manner — or even pre-empting the discussions by socializing ideas early — is far more effective and conducive for relationship-building and joint development than sending out emails, letters or other methods.

Click on this post for a partial list of approaches you might take (and questions to pose), ideally in conversation with suppliers if you need to ask for concessions, given all of the disruption from COVID-19.

The Impact of COVID-19 on M&A and Procurement Technology Investing (Part 1: Introduction)

I’ve decided to open up new Spend Matters Nexus columns and research briefs for everyone, not just subscribers, in the next few weeks, as we’re all certainly in a crisis period with the COVID-19 outbreak. To help make my coverage of investing and M&A more digestible, these dispatches will be shorter than usual (some will include frameworks and charts, others will not).

Having worked through two major shocks and downturns — the B2B.com implosion in 2001-02, the 2008-09 recession — I’m seeing both similarities and differences between those times and the coronavirus fallout today in the procurement, finance and supply chain technology worlds. But for different types of investing, asset classes and M&A activities, it’s clear the effects are already quite individualized.

Today, I’ll start with a summary perspective on what entrepreneurs, CEOs and business owners should expect for the next few months, based on transaction type. Please note: This column is not based on extensive primary research and survey data, but rather anecdotal evidence from what I’m seeing in the market, primarily as an advisor to sponsors and executive teams, but also as an angel investor and advisor myself.

Jason Busch is Managing Partner of Azul Partners’ Investor Advisory Group. He works with sponsors, CEOs and boards on data-driven due diligence, M&A and strategy. Jason is also the lead author of Spend Matters Nexus, a private newsletter and subscription service.

Coronavirus has global logistics sector reeling

Spend Matters welcomes this guest post from Dan Khasis, CEO and Founder of Route4Me, a global route optimization software company.

Since China reported the first case of coronavirus to the World Health Organization (WHO) about 12 weeks ago, the arteries of the global logistics sector have begun to clog up.

The measures taken by governments to curb the spread of the virus, such as a lockdown of manufacturing units and social distancing, are crimping the demand of goods and threatening to disrupt global supply chains.