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SIG Summit: Exploring technology for SOW-based services procurement

The SIG Procurement Technology Summit, being held online this week, has been providing its attendees with an immersion in “industry trends, innovations and solutions that are shaping high-performance teams and best-in-class procurement organizations.” While procurement is responsible for efficiently securing materials, goods and services, procurement of SOW-based services may be one area in which fit-for-purpose technology is wanting. SIG was not about to miss this gap.

Procurement Leaders: Hit the Refresh Button in 2020 at SIG’s Procurement Technology Summit 

Updated April 20: SIG has provided the latest information about its summit, which is now online only to accommodate coronavirus concerns.

SIG is committed to staying at the forefront of all the forces impacting our industry. With a global pandemic forcing many to work from home, we have moved the SIG Procurement Technology Summit from an in-person event to a fully online event taking place May 11 to 15, 2020. You can join us for just a few hours each day right from your home office.

A Holiday Gift Your Team Will (Actually) Appreciate

This time of year, giving presents to your team members and colleagues can be awkward no matter how well you know them. Look beyond the restaurant gift cards, trending gadgets and dried-out fruitcakes to a gift that will deliver an actual return on investment — an industry-recognized certification. By coming together in a virtual classroom, you’ll avoid those awkward, gift-giving faux pas and delight your team with an investment in their professional development to sharpen their skills, boost performance and credibility with both stakeholders and management, and contribute to the overall success of the organization.

Tradeshift: Vendor Analysis Update (Part 1) — Background and Solution Overview

Tradeshift is a cloud platform that connects buyers and suppliers with the goal of digitizing supply chain relationships, processes and information, while also enabling everyday procure-to-pay activities. Its capabilities span the buying of goods and services through to financing and payment — and significant capability in between, especially in the invoice-to-pay area.

In addition to providing its own procure-to-pay modules, Tradeshift offers an open integration framework that allows other technology firms (and customers) to integrate and/or development third-party apps, primarily centered on supplier connectivity, transaction enablement and collaboration. Tradeshift can even integrate alternative procure-to-pay providers in cases where specific enabling capability is desired.

This three-part Spend Matters PRO analysis provides an update on Tradeshift capabilities, both as a platform-as-a-service (PaaS) provider and as an e-procurement and invoice-to-pay technology vendor.

The updates since last year's review include information about real-time collaboration; a single sign-on; centralized access to POs, invoices, etc.; an AI-assisted chatbot named Ada; buying topics about GPOs and direct materials; global support; and new sections on payments/trade financing, analytics, services, integration and technology like blockchain.

The PRO analysis is designed to provide facts and expert analysis to help procurement and finance organizations make informed decisions about whether they should consider Tradeshift for both traditional “in-the-box” procure-to-pay requirements as well as unique marketplace/platform-type digital initiatives.

Part 1 of our analysis provides a company background and detailed solution overview, as well as a summary recommended fit suggestion for when organizations should consider Tradeshift as a complement to other procurement and finance solutions. The remaining parts of this research brief will cover product strengths and weaknesses, competitor and SWOT analyses, and insider evaluation and selection considerations.

5 tips from SIG on presenting at procurement industry events

Presenting at an industry event is an important step in any professional's career. It is also an excellent opportunity to promote, showcase and reward a team for a job well done. But most importantly, it is a critical factor in keeping an industry relevant, competitive and strong. Every professional worth their salt should consider it their duty to share their successes and failures.

Of course, in order to present at an industry event, you must first submit a proposal in the form of a session abstract. Sourcing professionals are well-versed in writing business cases and category strategies, and we have all read our fair share of good and bad proposals. However, when it comes to writing a speaking proposal, many sourcing professionals don’t give it the time or energy it deserves. These abstracts are often used to describe your session, and if the goal is to share your thought leadership, you will want to make sure your abstract grabs your audience’s attention. Consider the following five tips to write a compelling proposal for your next industry event.

Defining AP Automation Functional Requirements (Part 3): Invoice Mobility, Compliance, Analytics

e-invoicing

AP automation capabilities vary dramatically between different software providers, and the capabilities a finance or procurement organization will require to support the automation of AP processes also vary materially, based not only on company size but a broad range of other factors. These include organizational complexity, invoice capturing requirements (e.g., paper, PDF, electronic, etc.), systems complexity, systems integration, industry, EDI integration/support, payment/financing capabilities, treasury integration/working capital management, geography and compliance requirements — to just name a few.

To understand how different providers stack up against these (and other) categories of requirements, the quarterly Invoice-to-Pay SolutionMap Insider report can provide significant insight. And to create a one-to-one map between business requirements for AP automation and vendor functionality capability, SolutionMap Accelerator can dramatically speed up the vendor shortlisting and selection process, even allowing companies to “skip the RFI” entirely.

This Spend Matters PRO series defines AP automation requirements from a functional perspective to put AP, finance and purchasing professionals in the driver’s seat when they evaluate the available supply market for AP automation to fit their needs (either on a standalone basis or as a specific component of broader invoice-to-pay, procure-to-pay or source-to-pay solutions). Click to see our SolutionMap rankings of vendors in each category.

Part 1 of this series investigated core invoicing requirements for AP automation and some of the criteria that Global 2000 and middle market organizations should consider when selecting solutions (i.e., invoicing set-up, paper scan/capture support and e-invoicing).

 In Part 2, we turned our attention to an additional set of AP automation functional requirements, including AP process, invoicing validations, workflow, collaboration and integration requirements.

Now, in Part 3, we turn our attention to a final set of AP automation topics: invoicing mobility, invoicing compliance and invoicing analytics.

Commercial Value Management (Part 2): Using Next-Generation Contract Systems to Integrate Operations, Financials, Risk and Technology

Let’s start this piece with a question: How are high-flying SaaS providers measured?

Answer: Growth (hopefully profitable) through repeatable subscription-based revenue.

And what are those subscriptions? Contracts.

The enterprise value of these companies, like others, is based on the promise of future cash flows that are increasingly built upon a portfolio of contracts. Want to maximize enterprise value (like the CEO)? Better get good at managing contracts! This is not in the way that your legal department might think of contracts, but rather in a business sense that maximizes commercial value within those contracts that will add up to enterprise value.

Put another way: If chief procurement officers want to move from “chief spend officers” to “chief value officers,” they’re going to need better strategies and tools to do value management.

“Value management” is the highest level of procurement’s evolution in a framework that I developed in my previous life leading procurement research at The Hackett Group.

The problem is that while there are great tools for spend management, when you start going broader into demand (and multi-tier supply) and deeper into financial value flow beyond single-tier cash disbursements to suppliers, the technology requirements aren’t yet well supported by existing tools and vendors.

In Part 1 of this Spend Matters PRO series on commercial value management (CVM), we highlighted the fact that contract management systems are morphing from legal documents focused on transferring risk onto your trading partners, and toward systems that model all B2B commercial (and even non-commercial) promises with trading partners, regulators and even just internal stakeholders. The financially related “promises” or “commitments” are really obligations/rights that can be viewed as liabilities/assets. And these aren’t just ledger entries to close the books for regulators, but rather living, breathing promises made up and down the supply chain to deliver value to customers — at a lowest total cost of course!

Unfortunately, this chain of value doesn’t exactly flow across the fragmented landscape of systems out there. It’s hard enough to see contracted revenue & cost/spend flows in the direct materials supply chain where only a few advanced firms can stitch together some semblance of integrated business planning that brings in multi-tier supply-aware cost modeling and contracting (e.g., buy-sell arrangements for volatile commodities). Now, consider the services supply chain and an XaaS world where omni-channel value chains need to merge products and services.

For example, think about the mind-numbing complexity of field services operations where customer warranties (contracts) and service levels (contracts) need to be translated to supply fulfillment that can include leased equipment (w/ contracts), outsourced transportation services (and contracts), third-party contractors (directly contracted or via a service provider with its own contract), and even outsourcing providers (with BIG complex contracts) who might run the whole shebang for you. These contracts, sub-contracts, MSAs, SOWs, POs (a contract), etc. all have information in them related to direct committed revenue and costs/spend, but also hints at potential spend and business risk depending on what’s in (or not in) those contracts.

But, if you’re a CFO trying to manage your spending (“Spend” with a big “S” and not just supplier spend with a small “s”) and see both types of spending in terms of:
* Tying spend to revenue to understand profitability
* Seeing and shaping spend and resource commitments before they occur
* Cash flow implications of that spend
* Category and supplier views to maximize value from supplier spending
* Spend volatility based on price risk, volume risk, competitive risk and other supply risk factors like geo-political risk (e.g., trade wars) and regulatory risk (e.g. data privacy)
* Projects that drive this spending (e.g., in project-intensive industries)
* Drivers of this spend that are hidden (e.g., IT/telecom contracts of all forms)
* Legal spend (internal and external) to manage all of these contracts!

The problem is that you don’t have a single system to see all this. You have a G/L to close the books and maybe a planning-and-budgeting application rather than the “financial control tower” (go ahead and trademark that — it’s available) that you’d love to have something like an EVA/ROIC-type model that drives all the way down to the atomic contracts and execution systems. And if you’re good, you have a CPO with a single spend database and contract repository.

But, let’s face it, even for those firms with this, the contract is still usually a document artifact to refer to and not a dynamic system with complex pricing modeling and linkages to dozens of execution systems in the field that are REALLY governing the commercial aspects of operations. All you likely have in your contract repository is a field called “contract value.” And even in the simplest case, and even with the most modern S2P application suite, you’re likely matching supplier invoices to POs with payment terms that aren’t likely staying synched with the original contract.

So, contract data and associated CLM systems must transcend their legal artifact role and even move beyond the level of contract clause libraries and associate basic clause metadata. They need to go much deeper into the business realm (and not just the legal department realm) and be able to model and manage commercial data much more deeply. Doing this requires improved systems that manage what we call commercial value management — which is about commercial lifecycle management rather than contract lifecycle management. “Spend Management” is great, but spend is what you pay, and value is what you get. So you need to be really clear on who gets how much of what, under what conditions, and what happens if they don’t!

We spent a fair amount of time in our last PRO series installment that dove into the specific elements of CVM. In this second SpendMatters PRO series installment, we’ll dive primarily into the buy-side aspects of this topic and discuss how procurement organizations — and procurement’s functional peers in finance, IT, legal, GRC, SCM, sales and HR (and any related CoE combinations) — can use contracts as commercial data hubs to better support not just basic buy-side CLM within a source-to-pay context, but also how to use it to better connect procurement with these internal partners to help them manage spend/suppliers in their functions individually and also collectively with each other — and out to external stakeholders.

We’ll also highlight a few areas where CVM support emanating from a next-gen CLM platform can likely disrupt a few existing niche markets within and outside of the procurement realm.

For CPOs, Life Is Getting Complicated

During a routine meeting with one of our clients, the Chief Procurement Officer at a large Fortune 500 company, we were struck by something this person said: “I feel like I’m wearing so many hats these days, I need a hat stand to keep them all in one place!” Our client’s observation encapsulated something we were starting to see more often: a dramatic broadening of the role of the CPO.

A mere decade ago, a CPO’s job, while often difficult, was relatively straightforward: Find the best deal possible when sourcing raw materials or setting up production. But increasingly, that’s a fluid concept. What’s more, the changing nature of both technology and the manufacturing workforce has pulled CPOs into decisions that were once outside their purview.

Intrigued, we wanted to delve deeper into this trend, and we decided that this would be a fascinating area of focus for our annual “Chief Procurement Officer Survey.” Every year Deloitte conducts this global, cross-industry study to take the pulse of sourcing and procurement professionals. So, this year we’ll be exploring the role of the CPO — how it is evolving, and how procurement leaders are navigating and mastering complexity in the areas of technology, workforce management, and both the business and political environment.

New Trump Tariffs Are a Top Issue for Supply Chains, Managers of ISM Economic Reports Say

procurement news

With the Trump administration’s latest tariff increase on goods from China set to start Friday, the managers of ISM’s economic indexes spent part of their Wednesday webinar addressing concerns about the new levy’s effect on the economy, procurement and supply chains.

“I was hoping we wouldn’t still be talking about (tariffs), but alas we still are,” said Timothy Fiore, chair of the Institute for Supply Management’s Manufacturing Business Survey Committee, which puts out the Production Manufacturing Index (PMI) on the first of every month.

“If we’d had this conversation two weeks ago, I would have been more optimistic,” he said. “With the news this week, I don’t know that I have an opinion. But people who know and that I’ve talked to expect the tariffs to go into effect Friday.”

Direct Material Sourcing and Supplier Management Platforms (Part 2)

In the first installment of this series, I introduced six distinct platform areas that manufacturers are making investments in as part of core efforts to drive more successful savings, efficiency, compliance, collaboration and supplier engagement programs. The first, design/engineering and sourcing enablement solutions, represents a new class of direct materials e-sourcing toolsets that attempt to accomplish numerous objectives. Why are all of these areas so essential, especially in concert together? This Spend Matters Plus analysis examines why.

Direct Material Sourcing and Supplier Management Platforms (Part 1)

In enabling basic strategic sourcing capability for indirect, services and basic direct materials spend, there are now a lot — and we mean it — of solid choices in the market. And it’s a space that’s getting more crowded everyday. Yet in comparison to the broader sourcing marketplace, the direct materials market is, unfortunately, given short shrift. There are potentially many reasons for this. First, it’s complex — there is not one category of solution. Second, the user for these tools is not always the same as one who might use a more generic sourcing toolset (at least not alone). And third, the processes that direct materials sourcing toolsets support are complicated because they are used not only across numerous internal functions (materials management, plant management, operations, supply chain, design/engineering, procurement, sales and operations planning, etc.), but span multiple tiers of suppliers.

In a three-part Spend Matters Plus series that will deliver a cursory attempt to segment this market, we’ll attempt to overcome the current lack of research in this area by providing a concrete segmentation of different technology categories and the capabilities within each. Today we’ll consider additional context and provide a high-level segmentation and explanation of tools (which we’ll flesh out and provide vendor short-lists for later in the analysis).

Metadata Explained: What it Means for Spend Analytics, Supply Risk, Supplier Performance, and More

What exactly is metadata, you ask? It’s all over the media these days. Although not quite metaphysical, metadata is essentially data about data. In procurement and supply chain, especially in areas of risk management – which obviously can take just about any shape or form depending on just what risk means to your business – the opportunity for solution providers to develop additional value from metadata analysis is enticing. This is practically a freebie value-add that allows solution providers to remain far stickier with their clients. Sure, it requires a bit of initial programming and possibly some hardware to really massage the data, but after that there’s really no variable cost associated with this. The benefits can be tremendous – done right, this will be the most power risk analysis and opportunity assessment approach supply chain has ever seen. Read on for discussion of the benefits, use cases, as well as takeaways for suppliers and for practitioners.