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.


Making Sense of Supply Risk Management Solutions (Part 3) — A Look at 8 Supplier Management Providers

“Supplier management,” often called “supplier lifecycle management,” is an area that procurement practitioners struggle with because of its complexity (as is the intersecting area of supply risk management that we’re covering in this series). Supplier management generally breaks out into two main areas:

  • Extracting value from supplier relationships. This includes supplier performance management (SPM), supplier relationship management (SRM), and supplier quality management (SQM)
  • Protecting that value through supplier risk management (and ancillary supplier compliance management) that we’re drilling into in this series

Note that supplier information management (SIM) is also part of supplier management and manages the core information that supports risk and reward from above — and the information/intelligence requirements for supplier risk management are immense. For more on this definitional stuff that practitioners will find useful as well, see our PRO article here, and from a technology market/provider standpoint, we analyze these supplier management solutions in our SolutionMap vendor rankings and benchmark database.

Part 1 of this Spend Matters PRO series gave an overview of supply risk management solution market, the issues for enterprise risk and the types of solution providers available. Part 2 began our look at nearly 50 providers in this space by comparing four vendors in a key area — supply chain risk management (SCRM).

In this Part 3 of the series, we’ll examine a group of the top-performing supplier management providers, including both “suite” vendors competing in the source-to-pay (S2P) market as well as best-of-breed specialists. Both have a key role to play in the broader supply risk management market. This Spend Matters PRO analysis provides insight into this group of vendors, which we describe as supplier risk management providers. It is the third-part of our series exploring the broader supply risk landscape (which goes beyond supplier risk).

This brief provides an overview of where and how providers like Allocation Network, APEX Analytix, Coupa, HICX, Ivalua, Jaggaer, Procurence and State of Flux “fit” alongside other types of vendors targeting supply risk management. It describes specific solution capabilities they offer and provides examples of common risk use cases.

This PRO analysis also includes a capabilities ratings matrix for supplier risk management of those eight providers, based on the latest SolutionMap dataset from 2020. The vendor ratings matrix compares 10 capabilities, including supply risk, enterprise risk, risk assessments, mitigation planning and regulatory compliance.

While these eight providers are not a substitute for supply chain risk management specialists such as Resilinc, riskmethods and Resilience360 (which we rated on 18 capabilities rather than 10), they provide deeper and essential functionality from a core supplier and entity-level management perspective.

Finally, we should note that while the top-performing providers mentioned above do not represent an exhaustive list of all supplier management providers with capability to support supplier risk management, it is a strong sample as a starting point for those exploring capabilities in this area. Each has something unique to offer — and opportunities to address.

Let’s dive in!

Making Sense of the Supply Risk Management Solution Landscape (Part 2) — Comparing 4 of Nearly 50 Vendors

In Spend Matters’ previous installment of this PRO series, we highlighted the fact that just as there is not a single type of enterprise risk, there is not a single, defined market for procurement and supply chain risk solutions that address these risk elements. We segmented the supply risk market into eight areas that integrated upward into the enterprise risk management (ERM) and the governance, risk and compliance (GRC) space, while also drilling down into some key risk types, spend types, risk processes (e.g., monitoring vs. structural mitigation), and areas like fraud monitoring and contract risk management.

In the remainder of this series, we will explain these different segments and introduce nearly 50 (yes, fifty) providers that help solve various aspects of the supply risk problem. We’ll also offer some advice on how to mix and match these solution providers depending on your objectives and your constraints.

In Part 2, we start by diving right into what is arguably the most important sub-sector within this market — supply chain risk management.

This sector includes providers such as Resilinc, Resilience360 (a DHL spinoff) and riskmethods. Spend Matters PRO will publish individual vendor reviews of these three providers (as well as Prewave) later this summer. But for now, we offer quick introductions to these providers and a ratings matrix to show how they compare — and which of them offer differentiated capabilities.

The vendor ratings matrix compares 18 capabilities, like supply risk, enterprise risk, data sources, category modeling, and visualization. (PRO subscribers can click this post to see the detailed scoring.)

Making Sense of the Supply Risk Management Solution Landscape (Part 1)

Enterprise risk has never been higher.

The COVID-19 crisis has been an accelerant to other enterprise risks, such as cyberthreats, employee health and safety, and most certainly, supply risks affecting suppliers in complex value chains. For procurement and supply professionals, managing this risk is challenging because they might not necessarily get credit for reducing supply risk that they do for reducing supply costs (spend), but risk certainly impacts them and their ability to help the business accomplish its goals.

Herein lies the good, the bad and the ugly. Supply risk management is a two-headed beast:

  • The ability to manage and mitigate RISK within the SUPPLY MANAGEMENT function (i.e., source-to-pay and broader value chain), including within the supplier management process
  • The SUPPLY-side aspect of enterprise RISK MANAGEMENT where enterprise risk and compliance (including to CSR/ESG goals) requirements get extended out to supply chains and third parties (e.g., suppliers!).

The “good” is the ability to extend and integrate enterprise risk/compliance out and back to the external partners that are woven into your business. Supply risk management is intrinsically linked with enterprise risk management by performing supplier risk management processes within the S2P process intrinsically as part-and-parcel of the TPRM (third-party risk management) process that sits within the top level ERM (enterprise risk management) and GRC (governance, risk and compliance) processes. Or put another way, if you’re going to reduce enterprise risk, you need to extend your risk management processes outside the four walls to your trading partners — and make sure that your internal stakeholders are aligned in that effort for business continuity planning (BCP).

As such, the “bad/ugly” aspect of poor alignment is the inability to execute these aligned processes given the fragmented terminologies, methodologies, regulations, stakeholders and solution providers/markets vying to help solve these issues.

We can’t delve into all the organizational issues here — e.g., the philosophical/religious battle of whether ERM or GRC is the best top-level methodology; or where sustainability best slots in; or who should own TPRM organizationally (GRC? Procurement? Both?) Regardless, when you start “connecting” the dots across (and within) these domains, you’ll see the potential linkages that are needed — and how many are lacking. For example, very few procurement organizations have helped establish a “single face to the supplier” via a supplier portal that integrates these various risk areas in IT, GRC, legal, etc. (i.e., beyond just a basic procurement/AP registration portal with some basic risk functionality). It’s a technical challenge and an organizational challenge.

We see many of our practitioner advisory clients struggle with how to unify all of these stakeholders and systems — and also just getting the funding needed to do so. They also struggle with what types of providers are appropriate to consider beyond the traditional silos or “lanes.”

In this Spend Matters PRO series, we’ll present a framework for supply risk management that not only is segmented to meet the objectives of supply-side professionals, but also integrates into the higher-level enterprise risk/GRC areas — and simultaneously reflect the current state of solution/services providers. This mega mashup market is messy because there’s a lot of provider overlap and also because of changing dynamics between SaaS solution areas — and because of changing provider market dynamics around content aggregation, analytics-derived intelligence (which is increasingly based on large communities of users and purpose-built machine learning algorithms), risk scoring methodologies and other areas.

Part 2 looks at four of the nearly 50 vendors that we'll introduce in this space.

Part 3 looks at eight supplier management providers.

Getting Real and Resilient in Direct Procurement Execution

Direct procurement execution area (i.e., e-procurement for direct) has been crying out for better technology for over 40 years, and it’s actually much more complicated than you’d think.

I’ll dive into this in future analyses, but one interesting provider that I checked out recently is SourceDay.

Despite the name, it’s not a strategic sourcing player, but rather focuses on direct procurement collaboration/execution (see our Spend Matters PRO analysis on SourceDay here). My colleague Nick Heinzmann also wrote up a nice piece on how COVID-19 was impacting the customers of this scrappy 70-person firm out of Austin, Texas.

I spent some time demo’ing its product, and it’s definitely on the right track in attacking this area.

Modernizing the healthcare supply chain in the coronavirus era

healthcare

The COVID-19 crisis shook almost every industry globally, but the healthcare system was forced to adjust in real time.

Spend Matters’ Chief Research Officer Pierre Mitchell recently spoke with Karen Conway, Global Healthcare Exchange (GHX) Vice President of Healthcare Value, about the issues that hospitals faced with their supply chains, and how the industry has learned from its past mistakes.

“One of the first things I did when the crisis broke was to review lessons learned from past outbreaks: SARS, H1N1 and Ebola. In all, the supply chain was noted as one of the biggest challenges,” she said.

SirionLabs raises $44 million, signals its arrival at the CLM winners podium

procurement

SirionLabs just announced it has raised $44 million in a Series C round that brings cumulative fundraising to $66 million for the contract lifecycle management firm with 400+ personnel. This is a major funding round and vote of confidence for SirionLabs as it moves into the leading positions top CLM market players, which includes providers such as:

  • Icertis, the current unicorn in the CLM pack. Both Icertis and SirionLabs are based in the U.S. with large development teams in India.
  • DocuSign, the ubiquitous e-signature vendor that has moved up the value stack by acquiring sell-side-centric CLM player SpringCM and also acquiring AI-pioneer Seal Software (a very smart move).
  • Apttus, now owned by Thoma Bravo, just announced its acquisition of Conga to help it penetrate the huge Conga customer base (another smart move albeit with some CLM application overlap in the portfolio).
  • Agiloft, an innovative CLM and services management application provider built upon a no-code platform that brings usable RPA and AI “in a box” alongside the apps.

We’ve been covering SirionLabs (and all of these players) for a long time. In its six-year history SirionLabs started out as a niche tool for managing strategic third-party relationships (and the contracts that sit underneath). It’s the detailed modeling of those complex services contracts that SirionLabs has mastered. You can see this in the webinar that we participated in with Unilever where Unilever has used SirionLabs to handle complex services contracts with literally tens of thousands of contractual measurements.

It’s this ability to model complex service levels and obligations (and the associated risks, opportunities and downstream “value leakage”) with a best practices knowledge base that is embedded into its system content and analytics (much of it with robust native machine-learning capabilities). This is why we’ve counseled SirionLabs to go all guns blazing into CLM, because in an everything-as-a-service (XaaS) world that is increasingly digitized, externalized and complex, the contract gets elevated from a one-size-fits all risk transference document owned by the legal department to an ultimate commercial system of record for business value — especially in B2B (this is also far more than a siloed sell-side CPQ systems that configure customer-facing proposals/quotes).

We call this new prospect for contracts and business value “Commercial Value Management” and it’s an underlying competency that underpins all enterprise business applications that manage processes or services that deliver business value — hopefully all of them!

SirionLabs has attained “Value Leader” status in our CLM SolutionMap for a while, with good reason: It has leading solution capabilities and it gets good marks from its customers. Some of the other industry analyst firms are only now starting to wake up to SirionLab’s capabilities. Our SolutionMap has hundreds of requirements in it and reflects our deep assessment and also pure voice-of-the-customer assessments, which is a differentiated methodology relative to the “magic wave scape matrices” out there. In fact, we’re in the midst of evaluating SirionLabs right now for our upcoming Fall 2020 SolutionMap release, and they’ve made huge strides in usability and AI, while furthering the embedding of deep knowledge and best practices into the platform.

So, how will the CLM battle play out with some of the players above? And what does this mean from an M&A and investment perspective? We’ll address this now in the rest of this Spend Matters PRO brief, and we offer some related PRO articles below.

Procurement KPIs: The ‘Keys’ that Unlock the Value of Spend and Supply Management (Part 3)

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. In fact, one of the easiest ways to assess an organization’s buy-side sophistication is to review its portfolio of metrics. If all you see is a myopic focus on low operating expense and a high focus on year-on-year cost savings, then you know the organization isn’t taking a holistic approach that maximizes enterprise value.

So how do you get from tactical procurement metrics to more powerful spend/supply measures that help build new capabilities and favorably impact critical business outcomes?

In the previous installment of this series, we mentioned some of the more expansive sets of metrics that organizations use to measure:

  • Spend/cost management and savings
  • Supplier/supply performance
  • S2P process metrics for process performance (e.g., labor efficiency, cycle time, error rates, etc.)
  • Underlying capabilities in talent management, digital, etc.
  • Stakeholder-specific metrics related to their spend, their business objectives, their view into supply/supplier performance, and their assessment of procurement value add

In this final installment, we’ll dive a little deeper into the metrics (and cover 18 of the most important ones), but also use the metrics as a way to align various processes and stakeholders to accelerate a transformation. As part of this, we’ll provide a little more precision to the management concepts below so that they can be aligned and accelerated:

  1.  Value Management (and Performance Management)
  2.  Financial / Budget Management
  3.  Demand Management
  4.  Cost Management
  5.  Savings Management
  6.  Service Management
  7.  Stakeholder Management
  8.  Spend Management
  9.  Supply Management
  10.  Process Management (e.g., S2P management)
  11.  Procurement Management
  12.  Category Management
  13.  Sourcing Management
  14.  Supplier Management (or “Third Party Management” more broadly)
  15.  Contract Management and “Commercial Value Management”
  16.  Performance Management
  17.  Capability Management
  18.  Transformation Management

Finally, we’ll share a graphical performance management framework that will bring these concepts together and help you improve your performance management capabilities so that you stay aligned and focused on what’s truly important across the value chain.

OK, let’s get to it!

The Coronavirus Response survey — In the procurement trenches with ISG/SpendHQ

We’ve asked organizations of all stripes to contribute to our Coronavirus Response series, which highlights solutions that can help in a crisis. (See the intro piece here for an overview). The responses from providers have been extremely diverse (and we’re still accepting input via our survey.)

But the response from the procurement consultancy Insight Sourcing Group (ISG) that we received is so thorough and thoughtful that I’ve decided to simply publish it in its entirety in the Q&A style format that we used.

CORONAVIRUS RESPONSE: Contract Analytics — Finding and Managing Contractual Risk and Reward in a Pandemic

In the Spend Matters Coronavirus Response series, we are exploring the COVID-19 related business scenarios where the pandemic is affecting supply chains and commercial relationships — and how various countermeasures, solutions and providers are helping to respond. Much of the pandemic coverage started upstream in China where the outbreak originated. Last month, an ISM report that was conducted in late February cited that 62% of firms saw delays in orders from China (and a majority of firms also cited delays in simply getting supply chain information out of China). We did a deep dive into supply risk as the first topic of our now seven-topic series covering the pandemic response in areas such as:

  1. Supply risk management solutions that include supply chain risk, CSR risk, supplier financial risk, etc. (Read this category’s PRO analysis and solution recommendations here.)
  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 mobile-first contract workers anywhere you need them; solutions to “direct source” and manage contract workers; and solutions for data management and analytics.

This installment of the series covers contract analytics, No. 6 above, and deals with the topic of contracts (and commercial relationships more broadly). Staying on the China theme for now, the pandemic’s impact on Chinese supply chains led to roughly 6,000 force majeure certificates being issued by the PRC via its trade body to Chinese suppliers (a nearly 5x increase since early February). A force majeure clause provides relief from contractual obligations due to external events that are unpredictable/unforeseeable, unpreventable and of no fault of your commercial counterpart — and these certificates are somewhat of a “get out of jail for free” card for contracts.

The supply risk management firm Riskmethods cited that it has seen a 44% increase in firms that declared force majeure and a corresponding 38% increase in production stoppages or reductions in operating hours. It’s the latter metric that should be unpacked a bit. Force majeure is just a single clause, but it’s an interesting one because, similar to a business continuity clause, it represents how trading partners can help model and manage the effects of external risk/complexity on the commercial relationship. For example, Kira Systems, a contract analytics provider, recently conducted a study of two years’ worth of such Chinese supply agreements and found that within their sample of 130:

  • Only 74% even had force majeure clauses!
  • Of those contracts, 89% had contract language specifying the impacts/effects on the commercial relationship.
  • Within those, 42% specified contract termination effects, but 55% specified contract suspension (e.g., suspending performance obligations through some period of time) and 39% discussion/consultation to remedy the situation.

The whole point of this discussion on force majeure is to illustrate that contracts shouldn’t just be boilerplate text documents that include generic clauses that sadly try to properly transfer commercial risk to counterparties, but yet, end up creating downstream confusion and ill will because they don’t actually provide the needed risk mitigation and recovery when the crap really hits the fan like the coronavirus pandemic. The best contracts work in concert with robust risk management processes, policies and playbooks so that when various external conditions change, the underlying contracts can translate those changes to the affected parties and actually give them the decision-support / options to help jointly mitigate them (a business continuity clause is just one example here).

And herein lies the foundational problem: If you do not have an electronic contract repository that is filled with “intelligent” contracts that model the richness/complexity of the value exchange between the parties in commercial relationships in a risky world, you’ll be driving blind and putting yourself at risk. It’s like playing football without a playbook and not knowing what plays to call and how to actually successfully run the plays — NOT a recipe for success! We’ll return to this concept of playbooks later when we discuss Seal Software. Seal delivers many of its world-class contract analytics through a playbook approach where specific playbooks (i.e., the sequence of granular analytics to run that answer specific questions and support specific business use cases) and “rule books” (i.e., rule libraries and knowledge bases that are built on top of a rich contract data/metadata model) are served up as “Insight Packs” that can then be tailored by the client and augmented with Seal experts.

The foundational problem of poor commercial intelligence from an online contract repository takes many forms. IACCM benchmarks estimate that between roughly a quarter and a third of firms struggle to 1) find contracts they’re looking for, 2) find specific information with particular clauses, and 3) assess/report risk in their contract portfolios. So, when you consider the impact of COVID-19 on your customers, suppliers and employees, you can see how pervasive the pandemic’s impact is on contracts related not just to force majeure (and related clauses for termination, governing law, jurisdiction, arbitration, etc.), but also provisions related to delivery performance/service levels, liquidated damages, payment terms, limitation of liability and others.

We’ll dive more into the above clauses later when we get into specific use cases, but for now, CLM providers or niche contract analytics providers should be able to analyze contracts and related broader commercial information (which we call commercial value management, CVM) that in turn allow firms to:

  • Interrogate the contract portfolio proactively based on advanced search down to the clause level and even to the provisional language that includes specific obligations and risks (that hopefully have already been specifically modeled and extracted into granular metadata fields).
  • Perform where-used analysis and “related contracts” pegging to find impacts and enable changes (some of them being mass changes).
  • Identify what contracts have specific clauses in place (or not), including where either you or your counterparties can claim force majeure, but also the related information that determines the related clauses for notifications, required information for proof of harm, proof of mitigation (which might be specified in a business continuity clause), and types of available remedies/resolutions (contract suspension, cancellation, amendment, etc.).
  • Relate contracts to other critical data about counterparties (suppliers, customer, etc.) and value chains to help prioritize where to focus based on certain clauses. For example, customers might be actively trying to cancel/renegotiate their contracts that in turn may link to specific suppliers that you’ll need to pass on the pain. Some CLM systems allow this type of supplier-customer contract linkage.
  • Get ahead of contracts that will do you harm in terms of performance obligations and renewals (and related steps), but also use the pandemic as a good way to re-prioritize sourcing/negotiations efforts and also third-party/supplier risk management activities (e.g., liability issues for essential contractors that still are needed on site in operations)
  • Respond to specific adverse contract events that are occurring in real time (e.g., attempted contract cancellations) while also trying to support new deals and support transformation activities.
  • Support transformation activities during the downturn so that you can address highlighted weaknesses in your contract portfolio (e.g., weak/generic force majeure clauses that don’t specify pandemics or other related clause information).

We’ll dive more into the above clauses later when we get into specific use cases, but for now, such analytics help organizations answer the following questions related to some high-level use cases:

  • How can my contracts guide me in my need to radically cut costs, and more importantly, preserve cash?
  • How can I work with suppliers (or any supply chain partners) to accelerate existing cash-to-cash cycles and reduce working capital levels?
  • How can I support supply chain risk analytics to better support rapid decisions and risk mitigations?
  • Are “wet ink” paper contracts still being used, and isn’t it silly to continue using them given that COVID-19 can be spread through human-based contact or via intermediate surfaces (like a signing pen)? The chances might be infinitesimal, but there’s no better time to finally be moving to a fully virtual contract lifecycle and to get all paper contracts digitized into a proper contract repository. And where are contracting bottlenecks for customer contracts, supplier contracts, contingent workforce contracts and others holding up the value chain when every second counts and every precious resource counts even more than usual.
  • How standardized are our contract terms that are being lit up during the current pandemic, and can we use the crisis to help improve this standardization? Also, how richly are the contracts being modeled so that they can be directly interrogated for such decision support questions? And can these contract risk factors be the perfect way to align and operationalize other risk management processes and systems across the business? Hint: The answer is yes! And as a shameless plug, Spend Matters compares CLM solutions in our SolutionMap benchmarking process/database based not just on process-specific functionality, but also on the richness of the contract information models and underlying technical platform elements.

We’ll drill down into the high-level questions and examples in a moment, but for now, it should be clear that having a modern CLM system (and a commercial knowledge management database built within that system) with robust contract information modeling and associated contract analytics is a critical business competency to manage commercial value (i.e., the “CVM” concept again). But you don’t have to be on the leading edge of AI-based contract analytics to get many benefits from a CLM application, although having a CLM solution with some of these capabilities is a key advantage. These include providers such as DocuSign (with its pending acquisition of Seal Software), Conga Solutions, Agiloft, SirionLabs, Coupa (via its acquisition of Exari), and Apttus.

Some providers have built out specific COVID-19 capabilities.

For example, Seal Software brings its capabilities to bear with existing clients. SirionLabs has built a COVID-19 specific dashboard that has some straightforward analytics, shown below. SirionLabs also specializes in supporting “agile contracts” for large-scale services contracts like BPO deals so that if demand for services spikes or drops precipitously, the contracts can be updated dynamically to accommodate those shifts.

(Click to enlarge image)

CLM market leader Icertis shared some examples of clients using its solutions in interesting ways to address the crisis:

  • One well-known US-based multinational consumer electronics retailer has had its in store performance hit hard by the pandemic and has used the Icertis ICM application to digitize and radically speed up its supplier rebates process with electronics manufacturers — thus helping improve cash flow.
  • Another client is a food supplier/distributor that has been hit hard in its restaurant segment and has used the ICM solution for guided contracting in a mobile app that helps configure the sales contract based on various customer attributes, including payment terms calibrated to the financial status of the customer.
  • A life sciences firm had one of its coronavirus-affected regions move legacy contracts onto the ICM application so that workers didn’t have to physically go find contracts in the office buildings!
  • This move to a virtual CLM environment was cited by Granite Construction, a $3 billion firm headquartered in California, where a procurement staffer mentioned that “many back-office departments, including legal, had to transition to working from home. Since all of our contracts and contracting processes were cloud-based ... there has been little to no change for our business.” “Contracting had always been important, but now it’s more critical than ever. When the outbreak hit, we knew risk indemnities and force majeure clauses were already in our templates and our contracts; we didn’t have to think about it.”

These examples illustrate that contract management has a place in the coronavirus response, even if the use cases are very straightforward and don’t require advanced capabilities such as AI-based analytics.

It’s also important to realize that these commercial/contract issues are impacting an ecosystem of solutions / services providers beyond CLM tech providers. For example, NPI Financial is a market leading IT-intelligence provider and they offered up some insights on what they’re seeing around this topic in the IT/digital markets:

“Some buyers in hard-hit industries are defining plans to ask vendors for special concessions. This requires a strong business case and buyer-side compassion. What (if anything) can a buyer offer the vendor in return for concessions? E.g. Longer commitment, faster payment in the future, ability to use their name publicly in an approved case study or ad, etc. One thing we’ve seen across several of our clients is that buyers are approaching this with compassion — one enterprise told its IT sourcing team to “behave ethically and don’t be outrageous” as they push for cost reductions across their IT supplier base. They know some vendors are also hurting and want to be sure they’re financially sound and strong when we come out on the other side of this crisis.”

It’s encouraging to see buyers taking a holistic and humanistic approach that also lets them be a “customer of choice” when critical vendors/suppliers are hard-hit and to use the buyers’ market leverage responsibly to create value with a win-win approach that should pay off down the road with a thankful supplier.

Within the rest of this Spend Matters Coronavirus Response installment, we’ll dive a little deeper into some use cases and supporting tools.

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 providers too.

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

Coronavirus response requires integrated Supply Chain Management — not just Spend Management. Here’s what’s needed.

This Spend Matters PRO analysis piece has been posted outside the paywall to share more information about strengthening supply chains during the coronavirus crisis.


Procurement professionals, like any other, are affected by the current coronavirus pandemic. They will face many challenges in their supply chains. For those who operate within industries where physical supply chains are severely disrupted by the pandemic response, they’ve got bigger issues than analyzing their spend, consolidating spend via strategic sourcing and ensuring that P2P systems are efficiently executing against contracts.


Yet, “spend is what you pay” and “supply is what you get” — and right now, we’re not getting what we need to manage the supply chain in this crisis.



Most of the issues stem from the demand side due to social distancing and stay-at-home orders that starve some industries like travel and hospitality while others like healthcare (e.g., shortages of ventilators, protective equipment and diagnostic testing), telecommunications and consumer packaged goods are strained. Supply-side issues like throttled Asian manufacturing capacity still exist, but the current situation is really a broader story about botched federal responses, lack of basic public-private supply chain governance, naked opportunism, weak supply risk management and the inability to manage the complexity of the problem. That involves not only the physical goods supply chain, but also the human/services supply chain, the physical assets supply chain and the financial supply chain (e.g., to inject capital into the threatened suppliers who supply the supply chain).


What the current crisis also has highlighted, however, is a lack of integrated digital capabilities required to manage the scale of this problem.


This post offers ways to bolster supply chains.


For broader procurement issues, read Spend Matters’ Coronavirus Response series. See the introduction to our series, which we’ll continue to update with recommended solutions in the following areas:

  1. Supply risk management solutions that include supply chain risk, CSR risk, supplier financial risk, etc. (Read this category’s PRO analysis and solution recommendations here.)
  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 from the CLM space and the AI contract analytics area 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 mobile-first contract workers anywhere you need them; solutions to “direct source” and manage contract workers; and solutions for data management and analytics.

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

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 mobile-first contract workers anywhere you need them; solutions to “direct source” and manage contract workers; and solutions for data management and analytics.

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.

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