Do you REALLY need
a pipeline tool?
In Procurement, we have tools a-plenty. We have P2P-tools, contract authoring and database tools, RFQ and e-auction tools, just to name a few. We may even have some sort of savings collector tool. What do we get out of these? Can we say what status is our sourcing project portfolio at? Can we check the team's workload real-time and plan it ahead? How certain can we be of our savings delivery performance by the end of the financial year?
In Procurement, we have tools a-plenty. Porcure-2-Pay tool for one, that’s essential to channel requisitions through the Procurement process, through the proper approval chain and to drive spend through preferred suppliers i.e. by means of catalogs. It also helps to securely keep segregation of duties hence avoiding risk of fraud and later it will help accounts payable to match invoices to purchase orders. So far so good.
You may then also have decided to have a standardized source-to-contract process and selected a tool to help this become a reality. In this, you will have RfX’s running in a fairly standardized manner, allowing to create templates and reutilize them, having more or less standardized quotations from your suppliers. Q&A sessions can be held there, you can build up FAQ-sections too. Finally, you can set up an eAuction for the case in subject, the tool makes it easier (albeit not touchless) as well. Some providers even give you access to some market intelligence to find new competitor suppliers to invite, which is getting more and more interactive as a platform although artificial intelligence is still to be built in there.
In some cases, this source-2-contract tool helps you to build the contract draft too. Ideally you would have of course the contract draft embedded in the RfX already and you would just need to select the paragraphs and rearrange them in the desired order plus make some final touches. Suppliers may even add their adjustment proposals to it right in the tool to avoid an endless email correspondence with un-versioned files full of tracked changes.
You then also need a contract lifecycle management tool to monitor expiration of contracts, match pricing to purchase orders and securely store everything in a digital form.
Spend reporting and analytics
Then, savings. Procurement will always have savings as a key measure. You have your different finance and controlling guidelines according to which you will report your savings. This will include limitations and calculation methods and even another approval chain as well. Pro tip: the P2P tool in essentially and approval chain management tool. Use it creatively and you will avoid implementing different approval tools for every single workflow, be it savings reporting, invoice approval or a simple IT support request or having your light switch repaired by the facility maintenance team. Setting up dummy suppliers and channeling such requests through them can get you amazingly far.
I’m saying this, because you can easily overcomplicate every single Procurement tool workflow by adding the approval chain. It does sound very nice to have a savings collecting tool that possesses the ability to get approvals for the savings. But don’t forget, approvals may come from different levels/members of the organization, who may only have to log in there twice a year. You will have a hard time remembering them to do that and they will have a hard time remembering how to get in the tool and which buttons to push.
As long as you have other departments involved you should be very careful with requesting inputs from them. People outside your organization will accept to have a P2P tool, sooner or later they will want to order a laptop or a phone in which case they will be happy to have a forum to express this need in a common form. For other Procurement tools please bear in mind how many times they will use it. It does makes sense to have everybody’s comments on the contract in the source-2-pay tool, but is it worth setting up another account for someone who will have to access it once in a blue moon? Let alone the fact that many of the tools will have user-based pricing (which is just fair, considering the amount of support required being linear to the amount of users punching the tool) Getting back to the Pro Tip earlier: internal approvals can easily be obtained by the P2P tool by setting up a catalog „Contract approval process”, assigning an approval chain with Legal and Finance in it and putting i.e. the dummy vendor „Approved Contracts” at the end with a group procurement-mail address set up to it. Same applies to savings approval, just with a different approval chain and another dummy „supplier” with an email-box. (Make sure you select a P2P tool in which you can set up your own approval chains.)
Can you answer these questions?
Coming back to reporting: every procurement organization has already solved spend reporting and savings approvals/reporting somehow as it is their bread and butter. Can you force another workflow on it? Sure, you can, the question is only whether if it’s worth it.
To sum up so far: there’s a P2P tool, a Source-2-Contract tool, a Contract Lifecycle Management Tool, a Spend reporting methodology and a Savings Approval workflow from which you can extract the savings reporting too.
You have implemented all these tools, methods and workflows with a probably huge effort and a sizeable financial commitment. You will have a bunch of data coming out from these tools. If you’re lucky, these data are automatically available, if less lucky, you will have to extract them manually. Let me ask you 10 simple questions though.
Using the data available from these tools…
…can you estimate how much savings are you going to deliver in the financial year/quarter/month? Answer 1: No. Your systems tells you what RfX’s you have actually running and you have visibility on the completed ones, but no – or very limited – view on the future.
…can you determine the workload curve for the procurement teams? (for the entire unit and drilled down to teams?) Answer 2: No. Again, you may have an idea about the current workload, but as with savings, you have no visibility provided by the tools discussed above on the upcoming projects.
…can you tell how many sourcing activities are/were/will be carried out by Procurement (as an entire unit but also separated into teams?) Answer 3: Partially, but it will be quite an effort to drill it down. You can have this numbers from the S2C tool (without the future outlook) and they will have a category information as well, but it is very likely that you will not have an organization angle, i.e. team-level reporting. It is somehow always either-or. Large organizations may have it overlapped and they have a separate team for every category, but it then only applies to global categories and you again don’t have the regional/local angle on the numbers.
…can you tell whether the efforts are allocated to the right projects? Whether low-importance activities consume resources from what you really should be doing in order to deliver against the commitment you made? Answer 4: Not really. It takes a couple of man-days excel wizardry to provide you which team has how many projects in what category with how much baseline spend and how much savings do they deliver. You may have the data available, but the calculation and filtering it is a torture.
…do these tools provide visibility on every sourcing activity? Answer 5: No. You will have visibility on those are targeting savings. No policy implementation/roll-out, no payment term improvement efforts, no development activities, no assigned internal project-work. Just the savings related ones and maybe contract renewals.
…can you tell whether you have enough new projects identified or is the team in a certain timeframe contemplating over the existing ones? Answer: Not really. You can have an idea at a certain point of time, but without constantly monitoring it and following the trendline, it is usually too late and you have lost possibly months which cannot easily be recovered
…can you follow-up project statuses? Answer 7: Only if you keep on asking for them. None of these tools give you information about which project is in which status. If you ask for them, answers will likely not be standardized across the board: some will say the RfQ is launched, by which s/he means s/he started to think about the right wording, whereas others will say it has been sent out to suppliers. At a certain dog day in July or August you will suddenly have all your projects in “work in progress” status – not easy to tell whether they really progress or not. These are not easy to overcome. Additionally: will you ever know whether an RfX is delayed? Or overdue? No, you don’t have information at hand either to support it.
…can you do resource planning based on the data? Answer: No. For resource planning, the least you need to know is how long usually a project lasts. This is fundamental to determine how many people can tackle all suppliers with an addressable spend. As discussed under Question 5, you don’t even have visibility over all your projects, let alone how long they last.
…can you do effective performance management? Answer 9: No. We have just discussed that it alone takes several man-days to even drill down the numbers to team-level. You should be getting an overview at a click of a button. Otherwise you will end up measuring savings and maybe payment term improvements, which is hardly the big picture and tells very little about individual performance.
In the realm of cost take-out measures and headcount optimization efforts, can you effectively prove your team’s setup and defend its performance? Answer: No. You will be simply asked to do more with less. You probably will be asked anyway, but at least you need to be able to pinpoint inefficiencies and poor performances to decide on where to optimize further to keep delivering similar results, or, as a minimum, predict the consequences of a headcount cut in relation to the output function.
Frightening picture. How are you going to effectively govern a Procurement Organization? How do you manage the performance of Procurement Teams or even individuals?
For all this and more, you need a Pipeline Tool.
My Ideal Pipeline Tool
My ideal Pipeline tool shows me who does what.
It gives me an outlook into the future in terms of savings and workload.
It can provide me with real-time activity status information that is standardized across the board. It will give me information about project lengths. If a project lasts too long, I can always intervene and allocate more resources to it, reassign it to a more senior team member or provide help in any other way. It gives me the visibility over all projects, so I can prioritize them and delay/scrap less important ones to focus your efforts.
It delivers me relevant analytics automatically, in a pre-defined, standardized manner.
Furthermore, my ideal Pipeline Tool would only collect metadata: activity documents are anyway stored according to the archiving policy or if not, then I would not want to force a workflow on anybody. My ideal Pipeline Tool would not have any approval flow built into it: I don’t want to frustrate the approvers with yet another tool they have to remember how to log into and use. My ideal Pipeline tool would be able to drill down any and every analytics into even individual level, but certainly by any team. My ideal Pipeline tool would look and work like an app: slick and fast, anything but a usual ERP-type of software. We need to realize, that such tools are only as good as the quality of the inputs: if people like to use it, they will use it. People will only like to use it, if they don’t have to put in too many unnecessary data, if it looks nice and works fast – generally if they don’t have to spend too much time in it keeping it up-to-date.
Get a Pipeline Tool: it makes your life easier, it allows you to do performance management based on true facts and gives you a bit of science beside your well-developed gut-feelings to make decisions that bring your Procurement organization forward.
Pro Tip: Try Pypette