The digitization of purchase processes in the enterprise are creating a greater need for supplier management applications that work better together than allow chief procurement officers to get a “seat at the table” among senior decision-makers, according to a gathering of CPOs in Toronto on Thursday.
Former procurement leaders from Google, GE and other large firms took part in Procurement Executive Exchange, which looked not only at the challenges CPOs face but the range of technology choices available to help them manage them. While digital transformation has swept many other departments across B2B companies, those at the event suggested they are not getting visibility they need to be successful and demonstrate value to the rest of their organizations.
“The combination of selling to the CIO and the CFO leaves procurement in the dark,” said Bart Reekmans, CPO at Paramus, N.J.-Suez North America, adding that procurement departments are often left to do detective work on their own to understand what systems or technologies are being used to work with or buy from suppliers after the fact.
While there are already a wide number of tools aimed at procurement departments, meanwhile, attendees said they face questions around which run the risk of becoming obsolete, acquired by another vendor or simply not able to integrate with other corporate applications such as enterprise resource planning (ERP) systems.
“I find it hard to believe there are really 20 different providers of best-of-breed applications, especially with the churn in the supplier world,” said Jamie Orzell, senior vice-president of Strategic Sourcing Consultants based in Rochester, N.Y.
B2B vendors are moving to try and address those issues by delivering simple-to-use, flexible applications that will streamline procurement while connecting them more closely with other parts of the business. An example is Toronto-based Tealbook, one of the firms sponsoring the event, which has created a sort of “LinkedIn for organizations,” according to its co-founder and CEO,
Stephany Lapierre. Tealbook uses machine learning to gather information about suppliers from web sites, catalogues, newsfeeds and other sources to create profiles of various firms, and has now amassed about 4.2 million of them, she said. That means CPOs can pull out their smartphone and instantly learn, for instance, which suppliers a firm might already work with in a given area, whether there is any duplication of effort across other lines of business and, if necessary, an ability to find alternative suppliers that are not part of is current set of relationships.
“The more information we can find, the more knowledge, the more trust, the more efficient our clients can be in making faster decisions,” she said.
Lapierre referenced one client who had been introducing 25-30 new suppliers into various systems each week because procurement was so decentralized and uncoordinated across areas like IT, marketing and so on. Tealbook not only gives such firms a more holistic look at their suppliers, but can reduce risks by choosing suppliers with which a company has already conducted some kind of due diligence, she said. In some cases, using Tealbook has allowed companies to start requests for proposals (RFPs) in less than a week, she said.
As with any area of technology, of course, much comes down to data quality, which is why vendors are Montreal-based Fluxym is focusing on data cleansing and integrating data sources in source-to-pay systems and other applications.
According to Thierry Jaffry, Fluxym’s partner and vice-president, one of the complicating factors is that procurement can involve what he described as “multiple entry points for creation.” In other words, a CPO and his or her team might enter information about a new supplier into one application, while the AP payment might be entering the same or similar information to another, siloed application.
Fluyxym’s Simetryk product uses artificial intelligence (AI) to manually recognize patterns in such data to de-duplicate records while checking details such as bank accounts, tax numbers and so on. “It means procurement fills in only procurement data, and AP is filling in only AP data,” he said. Fluxym also helps with areas such as approval workflows, master data management and universal synchronization across the various applications involved in procurement processes.
The same business drivers are spawning startups that tackle even more granular areas of procurement. This includes Eved, a Chicago-based firm whose platform helps organizations tackle spend management around conferences and events. As founder and CEO Talia Mashiasch pointed out this can be one of the biggest investments in many marketing departments, but CPOs often have little way of seeing the details they need.
“There are tons of one-off suppliers. How much cost is it to bring that onto your vendor master (list) and then maintain it?” she asked. “There are also tons of one-off payments — you may need to pay that speaker in 10 days or you’ll lose them. Try to run that through traditional processes and you’re going to have a challenge there.”
As more procurement departments try out such tools, Lapierre said, they’ll not only reposition themselves among C-suite leaders but improve the kind of talent they attract.
“It’s hard to hire good, strategic sourcing category managers,” she said, pointing out that younger hires have grown up in an era where it is easy to shop online in their personal lives, which influences their expectations at work. “We need to help them toto be more strategic, empowered and to drive better outcomes.”
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