How Often Do Your Dams Break?

Lake Oroville, the poster child for the California drought, is now literally bursting at the seams.   The spillways failing,  people being pulled out of their homes, the beautiful Feather river being damaged, and more rain on the way.

Some facts are jumping out at me related to the situation.  There was a knowledge of the issues with the spillway and the repairs needed.  The capital request was $6M that was submitted and rejected years ago.  Now, just to repair the spillways, it is estimated to cost $200M.  This is not including the costs associated to the evacuations, or the lost of business in the area, or the repairs to the downstream impacts.

Beyond feeling horrible for the people living through this, I can't help but think about how this is an example of what occurs so often in businesses.  So often, we op't to be reactive.

Think about the Procurement professionals dealing with the contracting for the repairs of the dam.  Do they have any leverage at this point?  Nope.  Do they really care about the value of the services, the quality of product, or are the rightly focusing on just getting the repair done as quickly as possible?  Contractors working rain or shine, through the night, to get out of a dire situation.

How often are we in these situations?  Back up against the wall and money and quality going out the window.  We try to make the best of it, but it still really stinks.

So, you could learn from the apparent moral of the story about preventative maintenance and the real importance such programs.  But, there is another lesson here.  Within Procurement, we are always talking about adding value to the companies we support.  Not just saving money but adding real value.

One way to add such value is to help your customers focus on being proactive.   If you can help your companies avoid the dire, back up against the wall situations, we can drive a ton of incremental value.

My questions for you.  How much time are you planning with your customers about how to make small investments now to prevent larger investments later?  Do your goals support or incentivize your teams to take this approach?  Are you having conversations about items that are going to be end of life soon and what to do now?  Do you know the mix of new spend in their budgets vs maintenance/refresh costs?  Do you strategize, consult your stakeholders on how to maximize their budgets now?

I have heard that the best way for Procurement really thrive in organizations is to be great problem solvers.  I 100% agree as long as we are proactively solving problems vs being reactive.  Think about if we can prevent 3-4 of these aggravating situations each year.  We could possibly avoid accidents with our employees and customer complaints.  We could negotiate holistic contracts and make our stakeholders be superstars. How satisfying would that be?

Sourcing Accelerated

Let's talk about Sourcing being stuck.  Being stuck in the mid 1990s.  Being stuck in the same 6, 7, or 8 step sourcing process that was designed before there were concepts like category management or supplier relationship management.  It was designed before technologies like Ariba even existed.  The Sourcing process was designed when Full House, 90210, and Clueless were the rage.

Now, I loved the 1990s - I got jiggy with it for sure.  But, it is 2017!  It is time to fast forward, literally.  Many other areas in business have been focused on speed to value where we have been focusing on periphery, needed, improvements like P2P solutions, CLM, Spend Analysis, outsourcing, cost savings through FTE reductions in source through pay.  We have also done brilliant things like integrated supplier management and proving that we can add more value than cost savings.

However, there are few that are focusing on the core, sourcing process.  This is our achilles heal.  How often do you experience this:

• Hey Procurement, we have already negotiated this agreement, but can you sign the contract?
• Sure Procurement, you can help us, but you only have 3 days to get this agreement signed?
• We are trying to get this new product to market ASAP and we do not have time to take it to bid.
• Ummm...yeah...your goal is $25M more than last year.
• Or - my favorite - How long will this RFP take?  Procurement professional - well, our average SLA is anything between 4 to 6 months.

What in business today takes 4 to 6 months???  Really?  No wonder stakeholders do not want to use Procurement.  

What if we accelerated the sourcing process?  What if we reduced the cycle time dramatically?   Think about this.  If we were able to accelerate the sourcing process, we would be able to get more spend under management.  We would be able to offer faster solutions to meet business needs.  We would be able to drive compliance by taking away a large excuse.  It would be speed to value.  (By the way, I am not talking about e-auctions.  They have a time and place, but in a different article.)

There are technologies out there that somewhat help with this need.  They help with complex scenario analysis and provide templates that can be used to reduce development time of the RFP itself.  If deployed correctly, they can help create this acceleration.  

However, there still could be so much more with the technologies that are emerging in the market.  There could also be so much more if we, as Procurement professionals, actually focused on this.  

It could make your 2017 more like 2017 vs 1994.  Are you all in?

Calling All Unicorns - Help Needed

For those you have been following and those who are new to this blog, it is focused on getting Procurement Unstuck.  For us to progress forward, we need to think differently, challenge status quo, be disruptive, and take action.  There are some out there that are actively doing this and you, my friends, are unicorns.  Mythical creatures, who are becoming legends.

Thus far, this blog has been focused on sharing my point of view, but now we need yours, too.

First question up for debate - and an egg that I have not been crack, yet -

How have you successfully been able to get end users to complete their goods receipts in a consistent and timely manner?

The Perplexity of No PO, No Pay

Here is a common conversation I have had with companies.
"We have a No PO, No Pay policy," Jane from Acme said with confidence.
Me, "Really, do you? What is your compliance to No PO, No Pay?"
Jane, "Well, about 20%."
Me, "Does that exclude your documented exceptions?"
Jane, "Yes."
Me, doing the math in my head, "What is on is your exception list?"
Jane, "Well, legal, marketing, utilities, ...."
Me, I have now stop listening and ponder to myself that the "policy" is more like a guideline.  And Jane is still listing her exceptions.

I feel for Jane.  I have been Jane.  I think if we reflect back and really challenge ourselves, that we have all been Jane or still are.

So, why is this so hard?  Why do we talk about having No Po, No Pay policies when we really don't?  It is such a simple concept, but so complicated to truly achieve.

Executive Sponsorship
This is one of the main reasons that these policies fail.  Often the executive sponsors are a name on a back of a tee ball shirt vs being an active sponsor.  A sponsor who will hold other executives feet to the fire when they ask for an exception because they are unique.  This sponsor also needs to clearly understand the value of such policy and promote it across the company.  A sponsor who does not ask for exceptions him or herself.  Unless you have a sponsor like this, your policy is at risk.

Measurement
Do you have a goal that you are striving for with your policy?  Do you have a clear definition around how you will measure that goal?  Please, I beg you, please do not exclude your exceptions from this calculation.  If you exclude your exceptions, you are giving yourself a false warm blanket, cozy feeling versus a health dose of reality.  The definition of your metric should be as simple as invoices paid on PO/total invoices paid.

Enforcement
When I think of enforcement, I think of two areas - what is your control point in the process to actually enforce the policy and what are you doing with the data to provide visibility to your sponsor and other "enforcers" across the company.

Let's start with the control point.  This is simple, but complicated.  The control point must be that if AP receives an invoice that is not referring to a PO, it must be rejected to the supplier.  Then, the supplier must get a PO and resubmit the invoice.  That part is simple.  The complicated part is making that happen.  You have to have a good process and technology that allows you to communicate effectively to suppliers.  There will be a problem if your rejected invoices go into a blackhole.  Also, the suppliers need to be fully aware of this change, as they need to take action vs just resubmitting the non PO invoice over and over again.  (Been there, done that - it is not good.)

If you have the control point activated, then you also have all this lush data that you can use to change behavior within your company.  Using that data is key.  You could have a three strikes and then you are reported to executives in your organization for prompt action.  You could provide dashboards weekly.  The possibilities are endless, so please walk through that door.

Exceptions
This is my nails and chalk board moment.  Exceptions....eekkk.... Exceptions are like the little thread that you pull on and unravel a beautiful shirt.  Once you open the door, it is so hard to control.  Here is a concept for you - do not allow them.  If you receive an invoice, a PO should be referenced or at least in the system.  If there is no invoice, like taxes, dues, etc...then no PO is needed.  You might be thinking that is impossible, but maybe that is a large reason for the lackluster implementations of this policy.  Until we start thinking differently about this, we will continue to struggle.

And, that is why this is a simple, but complicated policy to implement.  At the end of the day, actually tackling No PO, No Pay gives your Procurement teams such an advantage and totally worth the effort.  Good luck all!

That Little Voice in Your Head is Your Anchor

Happy New Year everyone!  I hope 2016 was an amazing year for all of you and 2017 is going to break barriers.

You might be wondering why this blog went silent for over a month.  It was because I was relaxing in a cabana, somewhere warm, sipping on a sugary, rum drink for several weeks.....Ummmm, nope, that is not true.  I was doing something equally amazing, but not as comfortable.

I received a call in mid November to help with a complex, urgent project that was critical to the success of the company - and it was outside of my role description.  It was a crazy, intense, life changing experience since November, and it scared the crap out of me at the same time.

Some might look at those experiences as painful, long, tiring, stressful - complaining the whole way - and never seeing the opportunity.  However, that is such a miss. The mission of this blog is to help Procurement professionals to get unstuck.  There will only be ONE of you in this world in all eternity, ever.  (Think about that for awhile.) You are a unique gift to the world.  You are a unicorn.  It is time to realize that every experience and every call to action is a time to shine and to stretch into something better.

Why was this experience life changing and amazing?  It provided the opportunity to get out of my daily routine, to meet and lead all kinds of super talented people, to learn more about the company, to solve crazy, complicated process issues, to plan for now and the future, to forge relationships that I will have forever.  It also helped me understand that I can successfully step up into a role that scared me.

So often, we seek our routines and rely on our beliefs that we think are true about yourself, your company, your expertise.  You allow the little voice in your head to rule your world.  Opportunities like this allow you to breakthrough and stretch to something better - and make that little voice shut up, at least for awhile.

As we stare 2017 in the eyes, what are your plans to truly get unstuck?  If you feel and know deep down you can be better, what beliefs are keeping you back?  What are you going to do (you must take action) to live your deep down desires?  What opportunities are you going to raise your hand for instead of looking at your shoes when called upon?  Lastly, and MOST importantly, how are you encouraging your teams that you lead to do the same?

Let's make 2017 our year to show the world our best gifts.  Let's set sail - letting no anchors down this year.

The Black Hole of Contract Management

Anyone else singing, "black hole sun, won't you come and take away the rain"?  Ok, maybe it is just me!

By now, most of us likely have invested in a contract management system.  And, if we take a critical eye to how it is working, we probably have a really expensive repository of contracts with unreliable data, therefore, reporting that isn't good.  This results in at least knowing you have the contract, but really nothing else about it.  Does that ring true?  If not, congratulations to you!  You are a rare unicorn for sure.

Then, there are a handful of us, that truly have no idea what contracts we have.  We are told by our stakeholders or suppliers that the contracts are expired.  And, heaven forbid, that there is a merger or divestiture.  That is when the consultants start marching in.

It is truly amazing that most of us are still at this state.  Beyond saving money for our companies, we are accountable for adding value.  We are accountable for driving performance of our suppliers, to manage cash, to drive innovation, to mitigate risk - and we have no idea what we have actually signed up for with our suppliers.  It is like our contracts have been sucked up into a vast black hole.

So, what have we learned for this situation?  We have to think differently about how we manage contracts.

We need to manage the data better.  If fact, I would question why are we managing the data from the contract.  We are in 2016 - there is technology for that!  There are several solutions that are up and coming that take unstructured data and present it in a structured way.  You will still have to review the results and train the technology to learn more about your contracts, but it has the ability to keep your data up to date and reliable.  It will also allow you to find clauses in your contracts, like the infamous assignment clause.  If you are looking to improve your contract management process, you must look at these technologies.

We need to organize around the process.  There are very few sourcing professionals that like spending their time in contract management technologies.  No matter how easy the redlining and clause libraries are, that is not where we spend our time.  Therefore, there might be an opportunity to create a small, but mighty team who are experts in the contract management process.  They can do the processes in the system to gain the full functionality of the system - and much, much faster.

If you do not have the opportunity to organize around the process, then there are several solutions that allow for those processes to actually be managed in word (just like we are comfortable with doing).  Once you perform the redlines, it is magically also managed in the solution.   Your solution should have this functionality.

We should also think end to end.  If your legal team, risk team, insurance team, finance team, your stakeholders are not interested in using the solution, it is almost guaranteed that your contact management solution will mostly be a repository.  If fact, the ROI vastly decreases to the point that you should just buy a repository.  If you want something more than that, those other users need to be part of the business case, part of the process design, part of the change.  They need to be fully bought in.

During this Thanksgiving week, I am truly grateful for all the learnings we have had in the contract management space.  Now, we need to take those learnings and do something better.   Have a great Thanksgiving with friends and family!  Blessings to all of you.  

Mysterious Robotic Process Automation

Happy Halloween everyone!  What a better topic to talk about to get yourself in the mood than robotics?  Those scary, eerie, mysterious bots...

Unlike the picture above, we are not talking about physical robots.  We are talking about robotic process automation or RPA for short.  Have you heard about this?  My advice for you - get educated and get ready for RPA, if you have not already.  It is wicked - in a good way!

What is RPA?  
The easiest way to explain RPA is like a slightly more sophisticated macro.  It is a software program that you "tell" to do repeatable, high volume, logic or rule based steps that are performed in a system.  And when I say "tell", you are really recording the steps within the software so it can repeat those same steps over and over again without much human intervention.

Why is it Wicked?
Most of us have found macros to be a huge help to our organizations.  In fact, when we hire talent, we sometimes ask if they can write macros because we find so much value in those skills.  RPA removes the limits because you can use these robots on any system.  Think highly transactional, repeatable processes within Procurement or AP that are performed in a system.  Those could be recorded so the bots can perform repeatable tasks, so teams can focus on more value added tasks.

Bots do not take vacations.  They do not get sick.  They work all hours of the day.  They are super productive.  I have heard that 1 bot is equal to 3-5 traditional FTEs.  They also do not commit fraud, forget steps in the process, or try to avoid the correct, standard process.

And, they are somewhat cheap compared to a fully loaded headcount.

Feeling a little freaked out?
The first time I was introduced to RPA, I was freaked out.  This is a game changer.  It changes how we think about talent, for we need to start thinking about managers who are capable of managing bots.  They need to know the process, how to train them, and how to manage the quality of the results.  We also have to think about how to train and build capability for talent performing the repeatable tasks today because they will be shift to more value added tasks.

It changes how we make decisions about transforming our organizations.  Does it change if we should outsource?  Does it change the need for large scale ERP implementations?  Does it change how we integrate systems together?  The great thing about RPA is that you can apply it even if you are not on a ERP, even if you are not considered world class in your processes.  If applied correctly, your organization could leap frog quickly with much less investment.

They are still eerie to most.
There will be several people that are scared about this change.  There are real concerns about this functionality.  IT security is going to need to get onboard related to the risks and controls in place.  For instance, what protections are there from hacks?  A hacked bot could do a good amount of damage.  Internal Controls / Internal Audit will also need to get onboard with the amount of controls in place and that what you tell the bot to do is correct.

Lastly, Procurement and AP leadership, above all else, will need to get onboard.  Given this has such game changing potential, we might get in our own way (remember we naturally like our comfortable existence.)  I truly hope that more and more unicorns consider the new potential to transform their processes and organizations through using RPA.

Ready to be scarily awesome?
If you are geeked out about this, there are things to start working on to prepare for this change:

• Document what is actually occurring today in these repeatable processes.  It is important to be as accurate and detailed as possible when documenting these processes.   This will help determine where to apply the bots and how to tell them what to do.  
• Build your business case.  The business case could be about reducing headcount - but that is a small part of the opportunity.  Think about what you could get after as a result of the RPA implementation.  For instance, could you gain more discounts because your processes are more efficient?  Could you drive more spend under management because of the implementation?  What are the results of what your team can do for the company because of this new technology?
• Think about the process and organization to support this change.  As you might know already about me, technology is only the enabler.  If you do not have the process and organization to support the tech, you are not going to get very far.  It is time to start thinking about how you would perform QA, do you need bot managers, how do you audit the processes that the bots are supporting?

Anyone now dressing up as a robot on Monday??  Again, Happy Halloween and enjoy the possibilities!