Archive for July, 2008
Common sense procurement tools: Pro Purchaser
Worth checking out for procurement professionals is Pro Purchaser, a Canadian provider of market information. What I like about the service these guys provide is that it is all about common sense.
At first sight the site seems incredibly basic. It only has monthly updates of pricing information, for example. But the real value is in the combination of pricing information and “Negotiating Nuggets” – reports that Pro Purchaser produce on various aspects of negotiating.
For example, if you are wondering how useful monthly prices are going to be to you as a buyer, here’s a great Negotiating Nugget from Pro Purchaser called Direction matters more than accuracy.
Add comment July 27, 2008
Gartner Magic Quadrant for Sourcing Application Suites – A Reaction
See this link on Spend Matters for the story on Gartner’s 2008 Magic Quadrant for Sourcing Software http://www.spendmatters.com/index.cfm/2008/7/15/A-Free-Look-at-a-Gartners-Sourcing-Magic-Quadrant. My comment was a bit too lengthy for a comment on Jason’s post. So here it is, below:
First a disclosure: I lead the product development for TradingPartners. TradingPartners provides eAuction services. Very similar to what FreeMarkets pioneered all those years ago with their “Full Source” offering. We don’t sell software licenses, let alone software suites, so wouldn’t fall into Gartner’s analysis but we are considered competitors with a number of the companies mentioned in the Gartner Sourcing Magic Quadrant report. You can make up your own mind to what degree the comments below are self-serving or not.
I’m not keen on the name of the report. Despite all disclaimers the report is titled “Magic Quadrant” which implies that there is one “magic quadrant” that buyers should look at, i.e. the top right. And when I look at the vendors in the graphic the relative ranking seems fairly arbitrary. Certainly it’s not clear from the report why Quadrem should be better able to execute than BravoSolution.
The best part was the overall 10,000ft view of what is happening in the market. In particular:
- The distinction between strategic sourcing and tactical sourcing. “Organizations should expect to eventually deploy two separate sourcing solutions or two configurations of a single solution: one for tactical sourcing (for example, querying a contract fuel vendor for this week’s price per liter) and one for strategic sourcing (such as simultaneously negotiating rental car contracts across multiple vendors for service for the next three years and in 10 countries”.
- The summary of the consolidation in the sourcing software space (gone are Freemarkets, B2eMarkets, Frictionless, Mindflow, Procuri, Verticalnet).
- The recognition that wrap-around sevices are of paramount importance in strategic sourcing initiatives. “[E]ffectively leveraging different auction/event types for the best results requires a knowledge that can be gained only be using strategic sourcing applications. Furthermore, enabling suppliers to register online and providing customer service to troubleshoot their issues requires a significant effort that a procurement group will not be able to support without advanced planning and incremental staffing”.
- The recognition that strategic sourcing tools don’t require ERP integration. “They function nicely as standalone tools, because the trigger to commence a strategic sourcing event is the initiation of a project, and prospective vendors do not need to be in the vendor master unless they win the bid. The output of an event tends to be a contract. The unstructured nature of strategic sourcing lends itself to solutions that are architected as project management and document repository tools”. Here Gartner calls strategic sourcing unstructured. I would prefer to call it BRP (in contrast to ERP).
- The recognition that, in reality, buyers are still sticking to Excel rather than fully automating the sourcing process. “Requirements should be specified in the sourcing tool at the line-item level to fully evaluate and document the resulting bids using the application; however, in practice, many companies simply attach the specifications and record the resulting proposals at the header level, and analyze the results offline.”
Some parts of the report I would take with a pinch of salt:
- Including forward auctions in the debate. They are a red herring. Sure from a technology point of view they are similar to reverse auctions but in practical business terms they are of little relevance to most buyers.
- Cautioning that some suppliers are buggy. Without any meaty supporting arguments I’d assume all software is equally equal in this regard
- Come to think of it, a lot of the “strengths/weaknesses” seem cursory. E.g. Ariba is praised because it “offers varying scales of its sourcing product so customers can consume functionality as gradually as desired”. And Ariba is criticised because its “customers tend to use sourcing to solicit bids from local vendors”.
Add comment July 18, 2008
Enrich, Simplify
The Gaping Void cartoons are often really spot on, and here’s one of my favourites.
It neatly sums up something I’ve struggled with in my life developing software products over the past 10+ years. Programmers will prefer to continue building software (development) rather than slowing down and seeing how people use that software in the real world (support). So you often see a tendency to continue adding new features one on top of the other. Something that used to be good once gradually becomes more complex and brittle over time.
Where I am now I try to develop products along the lines in the Hugh cartoon. Deliver software in small chunks. Speed up and slow down delivery so that you have time to see how people use your latest code before you race off down the next avenue. Focus on the pieces that people are interested in. Spend time stripping stuff out as much as piling new stuff on. Depending on what the user base really uses. Something that is only really practical in the On Demand/SaaS/ASP/whatever world rather than the behind-the-firewall expensive-customised-software world.
Not a million miles away from the approach Mitch Free talks about in this interview with Jason Busch today (and what prompted this post).
Add comment July 10, 2008
Have you heard about Vendor Relationship Management?
Even if you think you know all about managing supplier/vendor relationships in your organisations, have a look at this site that has been referenced a few times places like Confused of Calcutta, Media influencer and weThink.
Strange how the same kinds of words can mean all kinds of things to different people. Before I saw these links, Vendor Relationship Management didn’t sound like anything earth shatteringly new - after all SRM is just another SAP module.
But The VRM project I’m linking to here is a different entity entirely. It’s spearheaded by Doc Searls of Cluetrain (*) fame. From the weThink link I’ve mentioned above:
While more of mind-shift than actual code, Doc Searls believes in the next few years, consumers will disclose their intentions to marketers through something akin to a personal rfp.
In this view, VRM is the opposite of CRM from an individual consumer’s standpoint. The concept is intriguing, but it looks like the project/movement is made up purely of marketers and internet mavens. And looks like the people involved in the project are trying to reinvent from scratch something that corporations have been struggling with for years. There don’t seem to be any people with real experience of being professional vendor managers. If anything the opposite is the case. Two of the comments that came back:
“Doc’s VRM sounds way hard. I don’t want to manage my relationship with Target or write a RFP for a blender. I don’t have an acquisition dept.”
And
Terms like “VRM” or “personal rfps” evoke some of the biggest jokes of cubicle-laden America
Ouch. My view: This VRM project would benefit greatly from some involvement from real procurement practitioners to join in the debate and hopefully help Doc’s vision become a reality. Without evoking any cubicle-oriented jokes. I can’t see the vision becoming reality anytime soon without that kind of involvement.
(*) Cluetrain is a classic, very entertaining and absorbing book about the positive power of the internet. Well worth a read for those interested in what the internet could do – even if it was written nearly a decade ago. I would counterbalance it with The Social Life Of Information which for me is a more serious/considered/balanced view of everyone becoming connected to everyone else.
10 comments July 8, 2008
Procurement Blogs I’m reading
Here are the procurement blogs I have on my current reading list
- http://www.spendmatters.com Where I go for industry analysis. And some entertaining banter.
- http://blog.sourcinginnovation.com Where I go for in depth dissection of offerings in the market place.
These are without a doubt the top 2 blogs in the space. Top 2 in terms of quality and quantity. Read these blogs first; anything of burning significance will end up on one of these two sooner or later.
Blogs allied to a particular vendor/service provider.
- http://www.esourcingforum.com Iasta’s blog and definitely a good one. David Bush walks a fine line between making the blog a true forum for all things supply chain, and running a corporate mouthpiece
- http://www.purchasingcourses.com/purchasingcertificationblog.html Next Level Purchasing’s blog covers training – always a good read
- http://www.mfgx.com/blogs/mfgx MFG.com’s blog. Mainly manufacturing. (Incidentally they changed their servers recently so any old RSS subscriptions you have via http://www.mfgx.com/blog/index.cfm will now be broken)
- http://www.2sustain.com/ Aravo’s blog (Supplier Enablement company with a green streak)
- http://purchasingtransformation.ibxeurope.com/ IBX’s blog
- http://www.strategicsourceror.com/ SourceOne’s blog. These are the guys who provide WhyAbe.
- http://www.supplyexcellence.com Ariba’s blog with apparently pretty high traffic. Note to Tim: Please can you make it more obvious that this is the Ariba blog. To the casual observer it isn’t obvious that this is the Ariba blog. Purely in terms of Ariba logo usage on the screen the casual observer might think that SpendMatters is more closely allied to Ariba than Supply Excellence.
- http://www.esourcingplace.com And mine of course. Much as I would like to consider myself un-biased I do work for TradingPartners so that is bound to affect my views.
General supply chain commentary
- http://tcummins.wordpress.com/ Tim Cummins (IACCM) takes a broad view from both a buyer’s and supplier’s perspective
- http://www.theferrarigroup.com/blog1/
- http://www.supplychainer.com/
- http://www.supplychainnetwork.com/
- http://www.buyeranalytics.com/purchasingblogs/
Other specialist blogs (dare I call them niche?)
- http://vmo-blog.com/ Without a doubt this is one of the best blogs out there right now. Definitely, definitely worth a read for people in the procurement space.
- http://www.licensinghandbook.com/blog/ Contract negotation
- http://www.agmetalminer.com/ Metals
- http://at-scm.com/ Irregular but interesting
- http://muchosalsa.com/blog/ A gentleman from HP who is planning on building his own business in the supply chain space
Ones that I enjoyed but seem to have tailed off in recent months. Watch them if they come back
- http://360vendormanagement.com/ Outsourcing blog
- http://www.massin.nl/eSourcing Occasional comments on the European sourcing industry
The various magazines also have their own blogs/RSS feeds. I distinguish between a blog which by its nature is more immediate and informal and an RSS feed of magazine articles. The blogs in my list right now are:
- Procurement Leaders http://blog.procurementleaders.com/procurement-blog/
- Supply Management http://www.supplymanagement.com/EDIT/BLOG/default.asp
- Purchasing.com Has a range of blogs http://www.purchasing.com/blogs.html
From what I can tell S&DC Exec and CPO Agenda don’t (yet) offer blogs.
6 comments July 3, 2008
Gearing up for more reverse auctions in 2008
This is from Supply Management in May. A quote from John Paterson, VP & CPO at IBM:
Sellers are more aggressive in their terms and pricing as they desire to maintain capacity and revenue streams. Sharp buyers recognise this and will typically look to place more business up for bid, take actions to renegotiate contracts, and seek out new suppliers. As always buyers should recognise markets change over time and they should do nothing that will damage their buying position when it becomes a sellers’ market again.
In these sorts of conditions reverse auctions are a great tool because they are able to cut through long-held assumed market prices and uncover exactly where suppliers are willing to go. But note John’s sage advice about not abusing market power. Again, reverse auctions, done well, are a good foundation on which to build solid supplier relationships (this has certainly been the case for me).
2 comments July 1, 2008
