Note: This has been unlocked from behind the paywall so all Spend Matters readers can see the vendors that we recommend in a crisis. Individual vendor profiles that we publish later will be available for PRO subscribers, but as always, the excerpts on PRO briefs are lengthy and provide valuable information for all readers.
The Spend Matters analyst team got together virtually this week in an emergency brainstorming session about the coronavirus outbreak. The purpose was to review our existing research and identify the most critical groups of procurement technology providers by type (and then selected providers within each) to help procurement organizations manage through the COVID-19 pandemic. We decided during this session to publish a comprehensive series to inform our subscribers.
As such, this PRO series will explore five types of providers. And it will detail, at minimum, three providers in each category*, including how each specifically can address COVID-19 procurement challenges.
The five groups of providers (with one illustrative provider per group shown below) we will profile in this series are:
Supply risk management (e.g., riskmethods. See its profile for this series .) here Sourcing and commodity management, including advanced sourcing, direct sourcing and commodity management to help dynamically plan and source (e.g., Jaggaer) Advanced procurement analytics to enable direct procurement and/or to perform “spend planning” when demand drops out or spikes (e.g., Sievo) P2P that emphasizes working capital, dynamic discounting, payment control and related finance priorities (e.g., Basware) Fraud, P2P and Vendor Management Safeguards (e.g., APEX Analytix)
We can’t profile every provider in this quick-hit series, especially those that have not gone through a formal briefing, demonstration and fact-check process. And we do not want to risk recommending providers that we would not trust for the specific task at hand based on our existing body of research.
Please note, this series will not duplicate past coverage. It is meant to build on existing research and share, specifically, how solutions can address the challenges caused by the COVID-19 pandemic (and those challenges that will emerge during it). Our approach is one of not just about throwing tech at the problem, but more of “the art of the possible” and tapping supply markets for innovation and capabilities (which is what procurement is increasingly tapped for itself).
Our guidance does not focus on technologies to support “the basics” such as listening to your customers (for example, a major retailer is advising suppliers to turn up the heat in warehouses, if possible, to reduce the likelihood of transmission). Nor other foundational work streams such as doubling down on janitorial support to disinfect surfaces, checking in with critical suppliers and getting feedback, evaluating the most critical contracts to get out of (and/or amend), understanding if you can get additional allocation if needed (with your hard-earned “customer of choice” status, right?), adjusting savings targets, reducing budgets (generally), etc. Some of this can seem like “supply risk motherhood and apple pie.” But, to borrow another cliche, you still need to “Just do it”!
Yet, some opportunities are not as obvious. So, in this PRO series of research briefs, we will focus on sharing specific use cases and example vendors that can make the difference beyond the basics, and put you, ideally, in a better situation than your peers — rather than simply treading water (or worse).
In our first installment, we will begin by framing each area in terms of the specific business issues that targeted technologies solutions can address. We’ll also give a preview of our shortlist of providers in each area (i.e., vendors we will explore in greater detail in individually in subsequent briefs each and every business day in the early weeks of the now global COVID-19 pandemic). Let’s begin.
* Each provider selected must have briefed Spend Matters about their solution, including going through detailed product demonstrations and research fact-checks in the past (resulting in PRO coverage and, if applicable, SolutionMap ratings). We may opt to add additional providers beyond these depending on the length of the crisis. Please note, owing to the fluidity of the situation and “need for speed” we may not provide fact-checks to the vendors mentioned if time does not permit, as we are basing our write-ups on our working knowledge of the solutions already, as demonstrated and validated previously. Theme 1: Supply Risk Management
Specialized supply risk management solutions such as
riskmethods, Resilience360 and EcoVadis/CyberVadis (which we will profile individually in this series based on how they can help tackle COVID-19) are ready-made for a crisis such as the current pandemic. While each technology provider listed above is different, they can help to answer a range of questions. What countries does my company do business in with suppliers at the tier one level? Tier two? Tier three? Etc. Which suppliers are affected by COVID-19 and what should I do about it? Will they be financially threatened because of COVID-19? Do I have supply risks in critical categories because of COVID-19? Is there anything I can do if suppliers are individually high risk? How do I focus attention on the items where commodity pricing (and potential lead times) are affected? What transportation lanes are impacted? Where is my cargo/containers today? Can delays or other risk factors be expected further down the inbound supply chain before it reaches my facilities? For example, West Coast ports are dying for container ship capacity because so many ships are idled in China in quarantine conditions. Which of my affected suppliers are potentially unsustainable in their practices (which could be leading indicators of other risk factors)? Are bad actors using the crisis to penetrate corporate systems with phishing scams aimed at vulnerable suppliers logging in to procurement systems?
In addition, providers such as
LegalSifter, Seal Software (acquired by DocuSign) and Conga (which purchased Counselytics) can offer specific capabilities that leverage AI and semantic analysis to help determine not just supply availability risk but also contract risk: What contracts are affected (contract discovery) by COVID-19 and what is my financial obligation risk exposure (e.g., penalties for not reaching contractual minimums)? What is the level of incident-specific risk in contracts due to COVID-19? Where can I potentially get out of an agreement with force majeure because of COVID-19?
As our series unfolds, we will explore the first three providers in detail (and if time permits based on the length of the crisis, the contract analytics providers listed here as well).
Theme 2: Sourcing and Commodity Management (Advanced Sourcing, Direct Sourcing/Commodity Management, etc.)
Direct materials sourcing, including bill of material management capability that enables part-level visibility, supplier management, event/bidding management, quality/first article testing and related capabilities is critical to rapidly qualify new supply chains — even with existing suppliers. Providers that pique our interest here the most include
Allocation Network, Coupa, Jaggaer and Synertrade.
In addition, advanced sourcing technologies can help set up an ideal supply chain based on new constraints that may be introduced given COVID-19 (e.g., avoiding suppliers in certain countries for a specific period of time, going producer/mill direct for ingredients, finished, semi-finished and raw materials to reduce supply chain risk in directed buy programs for tier one suppliers, working with third-party logistics firms (that will take liabilities) vs. individual transportation providers to reduce risk, etc. Coupa is, without question, the best-in-class sourcing optimization provider (based on technology acquired from
Trade Extensions), but Jaggaer (enhanced by technology acquired from Pool4Tool) offers compelling capability as well, among others.
While each technology provider listed above is different, they can help to answer a range of questions.
How do I identify all related products that need to be resourced? How do I find new suppliers if needed? How do I identify and rapidly qualify new suppliers as needed (based on specific category and/or manufacturing requirements) How do I involve all the stakeholders to get rapid project approval? How do I quickly start new projects, get bids, cut contracts and lock up available supply? How do I identify everything I need to keep a production line up and running for a key product? (BoM) How do I address and manage quality (both first article testing and continuous)? How do I best engage and develop at-risk and/or strategic suppliers that are critical for business continuity? How do I best split demand across multiple supply options to maximize supply assurance? How do I make optimal award decisions based on flexible (and changing) business constraints? Theme 3: Advanced Procurement Analytics (commodity management, supply/demand planning, etc.)
This theme focuses on spend, procurement and supply chain analytics that goes beyond the basics such as: standard descriptive out-of-the-box category spend reports, supplier spend reports, top n reports (for categories, suppliers, geographies, departments, etc.), basic trend analysis, standard diagnostic scorecards and basic trend reports.
In response to COVID-19 (both during the acute and recovery phases), advanced analytics may help make the difference between success and failure. Advanced analytics can be broken up into different categories but may provide:
True predictive insight into future cost and performance based on current (and not just historical) trends New opportunities based on (near) real-time data using machine-learning/AI-based insights Deep insight into community and market costs and availability using (anonymized) community intelligence Prescriptive guidance based on best-practices for the situation at hand Built-in support for global direct materials analytics including commodity analytics, foreign exchange considerations, etc.
In addition, advanced analytics solutions can provide what-if analysis based on expected scenarios, identify additional (but unknown-to-the-organization) sources of supply within the supply base (based on relationships across divisions and geographies and off-contract spending), identify additional products that belong to at-risk categories to make sure they are (re-)sourced before unavailability of supply arises, and even identify products that can be instantly, and even, automatically sourced without detailed price analysis (as market pricing has not yet been affected), allowing the sourcing team to focus on the most critical categories.
Vendors that grab our attention here are Levadata (which can do automatic category analysis and even sourcing in the electronics supply chain),
Sievo (which is one of the last best-of-breed procurement analytics vendors that hasn’t been acquired and which has very deep community insight into direct products and categories), and Suplari (with new AI technology that can bubble up insights that not only identify opportunities to save today, but, with the right tweaks, opportunities to prevent losses tomorrow).
While each technology provider listed above is different, they can help to answer a range of questions that include:
How much am I paying now for a product, and how much should I pay based on today’s commodity pricing and currency volatility (if I can lock in new sources of supply quickly)? How does a significant drop in supply availability (due to factory shutdowns, border closings, etc.) affect pricing and supply assurance? Inversely, how does a significant drop in (consumer/business) demand drive sourcing decisions upstream with dependent suppliers? How do I translate volume requirements down to tier n suppliers? (As the risk of supply assurance might be many levels down) What is the organization’s liability if it cannot meet upstream demands, and how does it best distribute limited supply during hard times? How do I translate abundance of supply (due to drop in demand) up through customer channels, especially if it’s sitting in the warehouse? How do I identify the future impact of forthcoming supply chain shortages (a part requires a raw material, but it’s two tiers down the chain, and the need for that raw material is hidden)? How do I detect unexpected early, or late, price swings? (The corporate toilet paper!) How do I evaluate and compare the cost of multiple assurance or risk mitigation options in front of me? How do I evaluate individual supplier risk with data coming from multiple sources? How do I understand the cost impact of supplier failure? How do I understand the cost impact of raw material availability? How do I prioritize categories to tackle first? How do I identify outliers that might signify future issues or opportunities? Theme 4: Financing/P2P/Working Capital/Payments
The worlds of intersecting procurement- and finance-led procure-to-pay (P2P) initiatives — as opposed to separate programs — are increasingly converging. When procurement and finance come together in support of transactional procurement and accounts payable (either, or ideally both, together), it makes it possible to create and scale working capital, financing and payment programs that bring the potential to create more resilience within both the organization and supply chain.
Providers that can enable this type of capability include
Basware, Coupa, Taulia and Tradeshift. While each of these technology providers is different, they can help answer a range of questions that include: How do we preserve cash? How do we deploy cash? How do we reduce risk while deploying cash? How do we raise cash to support the spike in working capital demand based on customer demand (e.g., Walmart)? 5) Fraud, P2P and Vendor Management Safeguards — bad times bring out the worst in everyone, and fraudsters rejoice!
Crises are notorious for two things — bringing out the best in people, and bringing out the worst in people. This is where you find out who the true heroes are in your organization and the true villains who might try to take advantage of your hardship (and the hardship of humanity in general).
This is also where a fraudster in the supply base — acting alone or conspiring with your organization — might pull out all the stops to get a fake invoice in the door, or at least fake payment instructions. This is where they will not only employ a full range of cyberattack technology, but take their research and social engineering to the next level.
So, even though you might think that critical supply assurance (at any reasonable cost) and employee protection (when travelling) are “job one” in the current environment — and you would be right — you can’t ignore fraud. Indeed, even while re-sourcing, cost control (where demand is dropping), emerging risk management, supplier sustainability (where critical) and early payment and financing options — topics we already covered — are critical, they do not account for the nefarious element of humanity.
That’s why we feel that providers such as AppZen,
APEX Analytix and ConnXus will be critical to include in your supply chain management and crisis response planning to make sure the suppliers you select are real, the payments you are sending are going where they are intended, and you are getting what you are paying for (and not paying for it twice).
While each technology provider listed above is different, they can help answer a range of questions that include:
Is the supplier a valid entity? And one that you can safely do business with? Is the individual representing the supplier or entity they are claiming to? Is the email or the obviously incomplete invoice / order acknowledgement you received a phishing scam? Is the supplier trying to take advantage of the circumstance and price gouge? And, if so, are they violating a contract? How do I protect AP/GL when setting up new suppliers quickly and cutting checks / doing ACHs/wire for emergency funding? Is the invoice completely legit? (Fraudsters will try to intercept valid invoices, alter banking / payment info, and resubmit with “correction.”) How do well-intentioned employees trying to supply their offices (or non well-intentioned employees trying to stock their homes) buying non-approved items affect cash flow and organizational finances? Should you limit to approved catalogs or buying portals (such as Amazon Business). If employees become ill, quarantined or trapped abroad, how do you temporarily replace them safely? (Who do you use for independent contractor management? Fiverr?) Should you go-fence replaced talent to minimize risk? (Use CW/S such as ShiftGig and Field Nation.) If you hire independent contractors, how do you verify their work? (time-cards and validated invoice submission though … )
Stay tuned as our coverage of specific providers continues.