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.


Defining and digitizing direct procurement (Part 2) — More on direct materials sourcing

Direct materials procurement

In the previous installment of the introduction into the direct materials sourcing area (which itself is part of a broader direct procurement landscape), the focus was on direct spend analytics and design collaboration & early supplier involvement/innovation.

In this Spend Matters PRO installment, the focus will shift toward the next five areas, which move from collaboration on product lifecycle management (PLM) into cost management, supply chain and direct extensions of upstream source-to-pay (S2P) applications. And we’ll give examples of vendors that excel in these areas.

SAP Fieldglass Assignment Management launches to tackle projects and track worker access, compliance and pay

SAP Fieldglass Assignment Management

SAP Fieldglass Assignment Management is a new solution that enables organizations in asset-intensive industries (like Oil & Gas, Chemicals, Utilities) to manage the execution and accounting of day-to-day plant maintenance work conducted by external workers, the provider said in a demo with Spend Matters. Read more about the benefits of tracking projects, workers, compliance and pay in near real time. And our analysts give their key takeaways from the demo.

E-procurement as a strategic weapon — With BuyerQuest acquisition, ODP preps for war in omnichannel B2B

ODP BuyerQuest acquisition

This Spend Matters PRO analysis looks at the deeper implications of Thursday’s news that the e-procurement specialist BuyerQuest was acquired by The ODP Corporation.

When many people think about e-procurement, especially for indirect procurement that is nonstrategic, it doesn’t seem very exciting. However, procurement can actually be a secret weapon — not just for improving back-office efficiency and driving down purchase-cost savings, but also a way for procurement to increase its value to the business, including supporting revenue uplift.

One perfect example here is the curious case of The ODP Corporation, previously known as Office Depot Inc.

ODP for years has recognized, and felt, the threat of digital disruption in the form of Amazon and other online retail taking business away from its on-premise retail operations. It made the pivot to B2B years ago, and its B2B business has been overtaking its B2C business, and the firm has set itself up as a B2B holding company to offer more than just B2B office supplies, but also IT (via its Compucom unit), and other horizontal business services and vertical solutions.

And it wants to stave off Staples’ recent bid (third time’s the charm?) and try to slough off the physical retail space that’s an albatross around its neck, especially in the times of a pandemic. (See related links below if you want to see our old coverage of the last edition of the Staples/ODP saga).

But, how can e-procurement help?

ODP, of course, has to use e-procurement itself to improve cost savings and efficiency, and it also has to integrate its B2B sell-side systems to various customer e-procurement systems (over 100 of them, to be exact).

But, why would ODP buy a nifty little e-procurement vendor (with some broader procure-to-pay capabilities) like BuyerQuest when it could continue pursuing the status quo?

And how could ODP lure Prentis Wilson, the B2B veteran who put Amazon Business on the map and left it to run Boxed.com, basically a digital-only version of retail discount warehouses?

The reason is threefold: opportunity, strategy and digital.

And it’s more than just something like Koch buying Infor — it’s actually more interesting and disruptive if you dive down into it. We’ve always used scenarios to get clients thinking — like, “What if Amazon bought Coupa (or plug in your favorite S2P vendor here)”?

Well, it’s potentially more than a hypothetical here, given what just happened!

In this PRO analysis, we’ll get into why this is such an important strategic move and we’ll address these issues:

  • Framing ODP’s strategy
  • Where Amazon Business fits in all of this (comparison)
  • What the transaction means for ODP and possible strategic thrusts
  • What the transaction means for BuyerQuest customers & prospects

If you want to come up to speed on BuyerQuest and how it compares in the procurement technology market, we recommend starting here:

Defining and digitizing direct procurement (Part 1) — Direct materials sourcing

direct materials sourcing

The introduction to this Spend Matters PRO series focused on digitizing direct materials procurement and broke the overall landscape down into four main areas. This follow-up installment focuses primarily on eight key digital capabilities for direct materials sourcing.

Although the “upstream” portion of the S2P transcends sourcing and includes supplier relationship management, the focus of this series is highlighting additional digital capabilities beyond those found in more generic S2P solutions.

Finally! Progress being made in the US federal government supply chain efforts for Covid-19

On Friday, the White House announced in its Covid-19 briefing that it will be invoking the Defense Production Act (DPA) to ramp up production of vaccines, at-home tests and more PPE. It also named Tim Manning the National Defense Supply Coordinator to help monitor the supply chain as it tries to turn the tide on the coronavirus pandemic.

Defining and digitizing direct procurement — Introduction and framework

digitize direct procurement

The term “direct procurement,” like the term “procurement” itself, means different things to different organizations. Some view “direct” only as direct materials while others include any supply chain-related spending (e.g., energy, tooling and any allocable spend that will flow to cost of goods sold, or COGS) and services such as contract manufacturing or third-party logistics.

In terms of process, there are many “extended source-to-pay” processes that direct procurement organizations must handle related to raw material inventory management, supply chain risk, supply planning/commitment, and the inbound logistics required to coordinate fulfillment between PO issuance and a receipt.

Many source-to-pay systems (S2P) nibble at the edges, but they’re not supporting the deeper supply management use cases that enable direct spend management because their data models are incomplete related to the supply network, product structures and supply chain plans.

In this Spend Matters PRO series, we’ll help direct procurement technology buyers and solution providers by:

  • Integrating the direct S2P process with broader supply chain process models and frameworks to help connect the dots process-wise between procurement and supply chain
  • Presenting a four-part framework, with nearly 30 underlying requirement areas, including many with substantial gaps not supported well by current technology providers
  • Identifying the three major areas where traditional S2P technology provider systems/platforms fall short in terms of data models, integrations and partnerships
  • Providing selected direct procurement insights from our SolutionMap benchmark database
  • Highlighting proven providers that DO support these extended supply management scenarios

Addressing the ‘first mile’ of the spend management process

budget to pay

In a previous post, I introduced the concept of “plan to pay,” an extension of the traditional source-to-pay process (S2P). But plan-to-pay workflows are generally implemented via supply planning for direct materials in the supply chain, but aren’t well-implemented for indirect spend management. In fact, it starts even more upstream from the typical “upstream” sourcing intake process. To extend the bad metaphor, it’s sort of like the originating spend pools high up on “stakeholder mountain” that feed the S2P value stream. It starts with the business planning process and the financial planning process (e.g., budgeting within finance-led FP&A processes) and then linking that into supplier spend planning via category planning, project planning, etc.

But this isn’t easy to implement! In the previous article, I gave the simple example of trying to take a spend cube (i.e., line items of PO/invoice spend history by cost center, category and supplier) and project it forward. If you have decent PO management and contract modeling, you might have some forward-looking visibility into future spend (like contract renewals and blanket PO’s), but for the rest, the best you will likely do is a budget reflected in your cost centers that are checked in the P2P process.

The trick here is to predict and plan the diverse mix of spend that will unfold within those budgets, and the extent that procurement can help the business drive more value from that spend upfront in the process. This is where real spend influence lies to help stakeholders support their business outcomes with limited budgets.

If procurement doesn’t manage this process formally with finance in the business, all sorts of dysfunctional behaviors and misalignments will result:

  • Budgeting is disconnected from supplier spend planning in category management, commercial/contract management, and supplier management.
  • The budgeting process is disconnected from P2P and creates unhappiness with the business when procurement inserts itself into the process (when the stakeholders thought that having available budget is good enough). These spend thresholds for procurement involvement are also usually very high because procurement doesn’t want to hold up the process when the requirement comes in so late in the game (which is why earlier involvement in spend planning is critical to touch more spend and to better effect).
  • Procurement gets relegated to a discussion of price rather than discussing spend and business outcomes.
  • Savings tracking becomes an after-the-fact exercise rather than being planned for upfront (including procurement’s own target-setting process for savings and other value improvements).
  • A dysfunctional use-it-or-lose-it budgeting process. Solving this with a zero-based budgeting (ZBB) process is one way to solve it, but it’s highly inefficient.

Doing spend management properly means starting it off right and basically treating it like the mirror image of the sales funnel. This “spend funnel” starts proactively during business planning and then flows through category planning, budget setting (with savings pre-baked into the budgets), sourcing/contracting, and then P2P for execution.

Unfortunately, the data in this funnel is fragmented across numerous systems, and we’ve been hoping that an S2P suite provider (or possibly an analytics-centric solution from a services provider or an FP&A-centric tech provider) might be able to help procurement proverbially swim upstream and perform this “spend planning.” In fact, back in 2014, we hoped for this:

A system that could “translate between the G/L views of pro forma financial planning over to both planned supplier spending (e.g., an upcoming contract renewal) and to the operational planning processes that the budget owners will have to execute against (e.g., project planning-vs-execution, supply planning-vs-execution, etc.). It requires strong analytics to not only map between the GL taxonomy, the category taxonomy and the contract portfolio, but now also tying into planning data (e.g., versioned scenario plans and rolling budget revisions). This modeling is nontrivial, and you will need to integrate your previous historic spent data snapshots into a forward-looking, time-phased, planning data model that exists within FP&A applications.”

And then we waited … and waited. And finally, a few months ago, we heard from GEP on a solution that they’ve been working on that addresses this exact area. GEP calls it a “Budget to Pay” solution, and it is, in essence, an extension of its core S2P suite that addresses most of what I’ve discussed in this broader plan-to-pay area.

We participated in multiple demonstrations and discussed some of the findings from GEP’s initial customer implementations. We’re waiting to get more feedback directly from its early customers, but the results so far seem impressive. GEP plans to formally release this solution in the near future, but in this Spend Matters PRO analysis, we’ll share some of our insights on the detailed problem statements and how the solution adds value (which is more than just technology).

Why source-to-pay technology needs to support ‘plan to pay’ for better planning in spend and supply management

plan to pay

Given the current business environment, good planning has never been more important, and this certainly includes finance, operations and procurement. We’ll explore the “plan to pay” topic in this post and, later today, in a Spend Matters PRO post for subscribers about GEP's Budget-to-Pay offering that addresses this area.

Finance should engage the business to translate business planning into financial planning, while operations groups ensure that value chains are operating smoothly — and procurement supports these stakeholders to help them plan with suppliers to help ensure that risk is minimized while value is maximized (and cash preserved).

Unfortunately, planning processes are disconnected. Find out how.

Prewave: Vendor Analysis — Solution & Platform Overview, Vision & Roadmap, Market Analysis and Analyst Assessment

Prewave

This Spend Matters PRO Vendor Analysis provides an overview of the supply intelligence provider Prewave, its solution, technology, value proposition and position in the marketplace.

The COVID-19 pandemic has clearly highlighted the danger of losing visibility of upstream supply conditions. Many critical suppliers have been threatened by severe demand reductions and internal operational challenges (including their own supply assurance and business continuity challenges). And while 2020 was a year that nearly everyone wants to forget, some organizations did see a silver lining, including those who provide solutions related to supplier/supply chain risk and compliance (including software, services, data and intelligence).

Supply risk solutions have two main risk management areas: supplier risk and physical supply chain risk (that affects supplier sites and the supply lines between nodes in the supply network). But although these are separate/overlapping, they both have a singular need for supply intelligence that integrates with the risk management workflows and analytics (e.g., supply network modeling, risk modeling, scenario planning, risk monitoring/alerting, risk mitigation and recovery planning/execution via “playbooks”).

This “outside-in” intelligence capability is about curated supply market intelligence that is explicitly mapped to a company's specific risk profile and multi-tier inbound supply chain to help identify threats to critical supply lines and improve supply chain agility and resilience. Supplier-specific intelligence is also important for monitoring critical suppliers from a broader lens of sustainability, social responsibility and industry-specific GRC issues.

Such supply intelligence can be hand-built by the buying organization, but there’s no economies of scale via network/community effects. This is why buyers are considering using third-party supply risk intelligence providers that can integrate such intelligence into those buyers’ existing supply risk and supplier management processes and applications.

One of these providers is an Austrian start-up named Prewave (and one that we’ve recently named in our 2020 “Future 5” list of procurement tech start-ups). Prewave isn’t a full supply risk management application suite, but rather, a supply chain risk intelligence provider that uses trained machine learning models to identify potential risks that are likely to be relevant to a firm’s suppliers and associated supply network.

Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation (Part 8) — Beyond Continuous Improvement

This is the last of our multi-part Spend Matters PRO series on transformation, focusing not just on digital procurement transformation, but also a broader supply-aware transformation of the value chain and the business (i.e., spend management and supply management improve business management). In the previous installment, we covered:

  • How procurement can use an empathetic, but deliberate, design-centered approach to align with stakeholders and meet them where they are at their many “tables” (albeit virtually given the pandemic)
  • The importance of a well-articulated procurement mission and “brand” that coherently communicates and speaks to the business stakeholders, rather than just being a technocratic procurement strategy that simply executes a narrow value proposition.
  • Pathways for procurement to be a little more proactive and structured in its transformation approach.
  • How procurement can formally “guide” a best-practices spend/supply management process supported by technology that goes beyond tactical “guided buying” processes.

We also featured our procurement adaptation of Amazon’s flywheel (and Covey’s influence model for good measure) before laying out a five stage transformation model with embedded recommendations and emerging techniques and tools that can help on the transformation journey.

But, there is still a chapter to be written here, and it deals with the problem of “the final mile” that links the procurement strategy and transformation to the actual projects in the trenches. When there is poor linkage, here are some of the issues:

  • Individual projects are considered in isolation without looking at the bigger picture relative to strategy and to other projects
  • Steady state processes are increasingly rare in today’s increasingly volatile environment, but yet, change management is still difficult to estimate and execute
  • The use of ‘wave planning’ for prioritizing sourcing projects (i.e., plotting impact vs. effort) is a noble goal, but the technique is less widely adopted across processes, and the methodology for estimating the effort is usually fairly crude
  • Speaking of sourcing, too often, the sourcing “intake” process is fairly reactionary and tactical in nature when in fact the opportunities could be made more strategic and transformational if they were better anticipated and coordinated with other efforts
  • Too much picking of low hanging fruit projects (i.e., strip mining for savings) without building “transformational muscle” makes it harder to attempt picking the higher hanging fruit with more complex cross-functional (and cross-enterprise) projects

In this last installment, we’ll share a simple five-step transformation project evaluation and implementation process that can be used for digitally intensive projects (or not), strategic projects/programs (or incremental improvements), and for cross-project transformation roadmapping. It will utilize 15 dimensions that can be used to estimate a degree of difficulty for specific projects (e.g. to help plot that wave chart discussed earlier) or for the broader transformation.

Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation (Part 7) — Blueprinting the Transformation

In this multipart Spend Matters PRO series, we’ve outlined how procurement can move beyond traditional spend influence tactics to add more value to the business and thereby relevant procurement value as well.

In this installment, we will summarize and review the previous lessons that highlighted some of these engagement examples, and will then pull up a level to reflect on what these transformation examples have in common. And then we’ll preview a transformation framework that can provide some practical guidance.

Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation (Part 6) — Transforming the Supply Network

In the previous two installments of this Spend Matters PRO series, we explored how procurement can improve its influence within the broader supply chain by supporting product/service lifecycles and transcending mechanistic BOM-based sourcing workflows to also focus on revenue uplift, supplier innovation and “design for supply” use cases.

In this installment, we will finish our coverage of how procurement (with the help of its functional partners) can enable the product/service lifecycle and the end-to-end supply network. And then we’ll wrap up this series on some transformation lessons learned in turning episodic moments of procurement influence into a more systematic evolution of procurement value.

Part 1 of this series laid out the need for leadership in procurement to help bring about transformational change — and how to work with stakeholders. In Part 2, we discussed how progressive procurement organizations were improving their influence through coherent communication and alignment of procurement “services” to various stakeholders.

Part 3 dove into procurement improving its influence into indirect spending and how it can improve how the business gets more value from its spend and its “spend management” process (e.g., dovetailing into the business planning process).

Part 4 was an introduction to attention to supply management and direct procurement influence. For Part 5, we dug into what it takes to create strategic supply partners and also consider the technology vendors needed for extended supply networks.

Now let’s look more into procurement’s role in transforming supply networks.