Uncategorized Archives • Vendorful

The Critical Importance of Supplier Visibility

March 30, 2022/in Uncategorized /by Peter Bonney

One of our users – let’s call her Anna – won the assignment to head up a new supplier diversity program at her company. She had authority to drive actions, budget to get things done, and clear targets for diverse supplier spend. She got to work.

There was one small problem. When Anna asked “what are we spending with diverse suppliers today?” the answer came back “we don’t know.” How can you know how far you have to go to reach your goal if you don’t know where you’re starting?

Anna’s story isn’t unique. Procurement teams increasingly face mandates beyond cost savings. These include Environmental, Social and Governance (ESG) goals, risk reduction, supplier innovation, performance optimization, compliance enforcement, and other complex tasks.

However, they also frequently deal with poor or non-existent tools for understanding their supply base. Even basic questions like “How much of our spend is currently allocated to diverse suppliers?” are hard to answer without a lengthy manual data collection process.

In order to meet these new mandates, Procurement teams need better visibility into the supplier base.

Benefits of improved supplier visibility

Organizations enjoy several benefits from improved supplier visibility:

A complete picture of supplier performance and supplier risk. This includes a holistic view of financial stability, ESG factors, country risk, customer churn, and other measures.
Alignment between performance, risk and spend. As a result procurement teams make informed recommendations about where to allocate business.
Better goal tracking. Teams can take the guesswork out of whether they are meeting their objectives and monitor data in real time.
Improved compliance. Breaking down internal silos ensures that compliance enforcement is a global process.

Problems that arise from poor supplier visibility

Conversely, major problems can arise when organizations lack sufficient visibility into their supplier base:

Poor visibility into supplier performance: Vendor performance assessments are manual – with intensive Excel and email data collection work – if they’re done at all. As a result, assessments are infrequent, incomplete, ad hoc, or all of the above.
Poor visibility into supplier risk: Vendor risk management is reactive rather than proactive. Therefore risk management frequently addresses problems after they happen, and mitigates risks on an ad hoc basis.
Decisions driven by intuition rather than data: Because procurement and supply chain teams lack supplier visibility, they’re also working with incomplete data sets. This leads to suboptimal decision making around spend allocation as it relates to performance and spend.
Siloed supplier relationship management: Because of the lack of a centralized system or repository for supplier information, procurement and supply chain teams often end up managing supplier relationships in silos. This leads to duplication of effort, inconsistency in approach, and communication breakdowns.
Inconsistent or nonexistent supplier compliance tracking: Without visibility into supplier performance and a shared understanding of contract terms, it’s difficult to track whether suppliers are meeting their contractual and regulatory obligations. That puts the organization at risk if critical suppliers are not adequately monitored.

The path to becoming a supplier visibility leader

There are three stages on the path to full supplier visibility, and they don’t all need to be done at once:

Develop a shared source of truth about vendor relationships. This means creating a centralized database of supplier information that can be accessed by the whole Procurement team and key stakeholders outside of Procurement and Supply Chain.
Analyze supplier performance on quantitative and qualitative measures across the organization. This will help identify areas where improvement is needed.
Apply business intelligence to data collected in steps 1 and 2 to visualize supplier performance and risk. Simply stated, data captures what is happening right this second, whereas business intelligence uses historical data to make predictions on future trends and problems. Early detection of issues and trends can help you avoid them becoming troubles later.

Organizations need to have visibility into their suppliers in order to manage them effectively. Without visibility, procurement and supply chain teams will suffer from several critical problems.

Conversely. organizations that improve supplier visibility will be able to make better procurement decisions, improve goal tracking, and ensure compliance. Procurement and Supply Chain teams can no longer afford to suffer from poor visibility into their supplier base.

By taking these steps, organizations can begin to improve their supplier visibility and reap the many benefits that come with it.

5 Best Practice Tips for Supplier Scorecards

July 2, 2020/in Supplier Scorecards, Uncategorized /by retaliate1st

Sliced bread, move over! For VMOs (Vendor Management Offices), strategic sourcing, and procurement teams, we’ve found something better: scorecards. By implementing a vendor/supplier scorecarding program, you’ll have better insights into the actual efficacy of your vendors. The value of this data flows into multiple strategic and tactical aspects of your job, whether that involves putting suppliers into corrective action plans, going out to bid to replace an existing supplier, or assessing the health of your supply base.

In the paragraphs to come, we’re going to explore five best practices for your scorecarding program. Unsurprisingly, organizations that apply these guidelines have higher compliance and more valuable scorecard data than those that don’t. Enough beating around the bush…. Let’s learn about how you get the most out of your supplier scorecards!

1. Standardize your scorecards

A surprising number of organizations create custom surveys for each of their vendors. On the one hand, this might feel right because each of your suppliers may be delivering a different set of products or services. However, this customization comes at a cost: it’s not really fair to compare suppliers against each other when they are evaluated on different criteria. As the saying goes, you want an “apples-to-apples” comparison. This means that you’ll want the questions to be somewhat generic, e.g. “Does the supplier deliver the goods or services in a timely manner?” Don’t worry about losing specificity though. As the context is established when the supplier scorecard survey is issued, the evaluator will be doing the evaluation specifically, not generically.

Although standardization is hugely helpful, there are occasions where it might not make sense to have a globally applicable survey. For example, you might ask your IT vendors about uptime and your direct materials vendors about defect rate. It wouldn’t make any sense to an evaluator to rate the uptime of the company that providers leather, for example. In that case, you might consider category-specific surveys. However, even those would be standardized per category so you can compare Vendor 1 against Vendor 2 against Vendor 3 if they are all in the same category.

Takeaway: Have a well-defined number of survey templates that you use for scorecards. If possible, use the templates consistently across all your suppliers in particular categories.

2. Use a common rating scale

Have you ever read movie reviews and been surprised that a pretty good movie was rated a three? Only after doing a bit of digging did you find out that it was on the traditional “four star” sale. We’ve seen movies reviewed on a one to ten scale, zero to four star scale, zero to five star scale, and even a report card-inspired “A through F” scale.

For a scorecard to be maximally effective, a person needs to be able to look at it and immediately understand the rating. The most common rating system for evaluating suppliers is probably the “one to five” scale, where five is the best score and one is the worst. This maps fairly cleanly onto the most common letter grading system: A, B, C, D, F. However, you might decide that this is insufficiently granular and want to expand the number of options. Or you might decide to shrink the number of options to something like this: fails to meet expectations, meets expectations, exceeds expectations. Ultimately, you’ll have to decide what works best. But once you decide, make sure that you use it globally. After all, there’s a big different between 4/4 and 4/10.

Takeaway: Employ a consistent rating system so everyone knows – unambiguously – what constitutes a good score and what constitutes a bas one.

3. Keep the length manageable

A scorecard is only generated if surveys are completed. So it is strongly in your interest to maximize participation. It’s been said that “brevity is the soul of wit.” It is also a characteristic of surveys that are more likely to be completed. When people are invited to complete surveys – any kind of surveys, not just vendor evaluations – if they see the survey is too long, they are quite likely to just close the browser tab and move onto something else.

Bearing this in mind, you should take pains to keep your survey compact and to the point. Beyond that, you want to minimize the cognitive load of the respondent as much as possible. The other best practices will help with this too. Having surveys and scoring ranges that are consistent allows people to get comfortable and focus on answering rather than deciphering what is being asked.

Takeaway: Shorter surveys are far more likely to be completed than longer ones. Aim to build surveys where the scoring can be done in around a minute and you’ll see higher compliance and get more meaningful data.

4. Invite the right people

There is a temptation, which is particularly understandable if you’ve cobbled together a scorecarding program using Microsoft Excel and email, to just invite everyone to fill out every scorecard and trust the invitees to evaluate only those vendors with whom they are engaged. You can imagine, however, that this approach leads to a poor completion rate. Consider this: you’re creating a lot of additional work for people who now have to spend time opting out of something that was never relevant to them in the first place.

In an ideal world, not only would you solicit the feedback of those stakeholders who are engaged with particular suppliers, but you would further target the surveys so the sections of the surveys would apply to specific subsets of stakeholders. For example, imagine you have a contract with a software vendor. There are 15 people at your organization who regularly use the software, but your contract stipulates that only two of them interface directly with customer support. You would certainly want all 15 stakeholders to fill out the survey, but 13 of them will have no opinion to render on the quality or responsiveness of customer support. Targeting the sections of a survey means that you can get the best quality data by focusing certain areas on specific subsets of the survey respondents.

Takeaway: Sending surveys to everyone in your organization and expecting them to figure out which ones to complete is a recipe for poor and/or incomplete scorecard data. Target the right people for the right suppliers and sub-target further if you can.

Run them regularly

Several years ago, we were talking to a company that, in order to be receptive to an auditing process, needed to have a comprehensive Scorecarding program. The company had roughly as many vendors as employees with a small, but highly-motivated vendor management team. We asked how often they conducted surveys to evaluate their supply base and were told that it happened just once per year. The process, which was manual, was extremely onerous and took roughly six months for a two-person team to orchestrate.

Each year, some percentage of their vendors would end up in Corrective Action Plans. However, since the data needed to identify vendors as problematic would only surface at the tail end of the year, the company was effectively accepting nine or ten months of substandard performance, SLA failures, and the like. The impact of this was increased risk, reduced output, and compromised ROI.

An annual cadence may well make sense for non-strategic suppliers. However, you should consider issuing surveys and generating scorecards more regularly for strategic or other high-impact vendors. And while a monthly roundup may make sense in some cases, it can potentially be cumbersome to stakeholders. For many, a quarterly cadence is a happy medium that provides good insight into supplier performance without being onerous to the evaluators.

Takeaway: When it comes to supplier performance management, annual scorecards may be appropriate for low-risk vendors, but you should compile data more regularly for your strategic providers.

Wrapping Up

If you’re considering implementing – or improving – a supplier scorecarding program, you’re ahead of the game. And if you apply the five best practices described above, you’re going to collect actionable data to strengthen your strategic sourcing initiatives. Check out Vendorful’s scorecarding module and learn how you can automate the entire process.

To see how Vendorful streamlines and automates the scorecarding process, schedule a demo.

Deconstructing 4 of the Top eSourcing Myths

March 7, 2018/in Procurement, RFP, Strategic Sourcing, Uncategorized /by retaliate1st

Hercules is a mythological. eSourcing? Not so much.

For a lot of businesses, a well-considered and thoughtfully-implemented eSourcing strategy could offer numerous benefits. Increasing sourcing efficiency, bringing down overhead costs, and improving supplier relationships are just some concrete examples. Given that, it’s almost surprising that businesses are all too willing to overlook these advantages due to certain eSourcing myths.

(Thanks, Charles Le Brun for the great Hercules painting! Greek myths…now, those are interesting.)

To address this, we’ve collected four of the top myths about eSourcing in order for you to understand the real value of eSourcing to a business. Hopefully, identifying these pervasive misconceptions about eSourcing will show you how it really works, lead you to informed decisions, and ensure your company has a reliable sourcing strategy.

Myth 1: My category can’t be eSourced

You might think your category is too specific or complex for eSourcing. The truth is, any spend category that you traditionally source using an RFI or RFP process can be eSourced, as long as

your category has a set of definable requirements and
suppliers can evaluate how they can meet the aforementioned requirements

In fact, choosing to automate your workflows via an eSourcing tool means you are able to follow best practices, implementing more stringent buyer guidelines and ensuring more accurate responses from suppliers. Take out your notebook (or simply download what we’ve compiled) and learn the RFP process steps.

Myth 2: eSourcing is only about the money

Many organizations assume that eSourcing is only ideal when price is not only a priority, but in fact the only consideration. However, good eSourcing solutions are built to support and provide solutions that go beyond simply cost. They are specifically designed to capture and gather bid information in a streamlined and centralized way to allow thorough and expeditious analysis. Such features can be used to both quantitatively and qualitatively evaluate bids on total value, rather than simply defaulting to the lowest price.

Myth 3: You can’t use eSourcing with trading partners or existing suppliers

Every supplier wants their customers to be customers for life. It’s therefore understandable to expect that some of your current suppliers might feel threatened when they are invited to participate in an eSourcing event. You can reassure them that simply because they are being asked to participate in a competitive sourcing process doesn’t necessarily mean that you’ll be making a change. Moreover, a robust eSourcing tool should provide value for suppliers as well as buyers. Indeed, after dealing with messy inboxes and collating data into different documents, suppliers may well be relieved to use a platform that supports collaboration, consolidates information, and more.

Myth 4: My company is too small for eSourcing

It’s possible, but we doubt it. Today’s tech-centric business landscape demands efficient solutions that will address business needs—regardless of size. Many of the newer eSourcing tools are also subscription based and scalable depending on a company’s needs. Such features actually make eSourcing more affordable and generate a better return on investment, particularly when compared with doing things “the old-fashioned way.”.

While eSourcing must have a strong ROI story and commercial rationale, it is strictly focused on helping organizations squeeze the last pennies out of potential vendors. There is a broader value story at play here. A good platform should enable you to define and implement better processes that will benefit your business in the long term. Opting to implement an eSourcing solution will help you create a better, more transparent and scalable process for stakeholders as well as the organization at large.

Can you think of more eSourcing myths that weren’t tackled here? Feel free to add any to the comments section below.

For a comprehensive explanation on how Vendorful can help you respond to RFPs and ensure consistent value, get in touch with us today.

Blind scoring. Better than throwing darts.

Why You Should Be Blind Scoring Your Vendors’ RFP Responses

November 21, 2017/in Procurement, RFP, Strategic Sourcing, Uncategorized /by retaliate1st

Imagine…. You’ve just finished an incredible dinner at a Michelin-rated restaurant. It’s the capstone on an amazing day that included massages, spa treatments, and tickets to a show. “It’s crazy,” you think to yourself; you’re not even doing business with this vendor yet, but it feels like there is some special connection there. Or perhaps that’s just the wine talking.

Blind scoring. Better than throwing darts.

Even under more normal circumstances, it’s difficult to eliminate bias in your procurement process. Ideally, you’d want your team to be as unbiased as possible so that they can judge RFP responses based on merit, and not what they know (or think they know) about the vendors. And while you might have the RFP essentials tattooed on your forearm, improving the integrity of the process can be challenging. A fair, unbiased purchasing process is the ambition of every procurement director, and blind scoring your vendors’ RFP proposal responses is a great way to work towards that goal.

Blind scoring is a process by which evaluators rate the responses of vendors without specific knowledge of which vendor is tied to which answer. What are the benefits of blind scoring? By adopting blind scoring, a buyer reduces the risk that bias subtly creeps into the purchase process. Of course, there are other ways that a sourcing team can allow an individual vendor to exert undue influence, such as by relying on that vendor to provide an RFP template. While there is no panacea, blind scoring can mitigate the impact of vendors that attempt to curry favor as well as unconscious biases — positive or negative — in the minds of evaluators.

When Blind Scoring is Useful

Let’s say that you are trying to purchase a new CRM for your network of car dealerships. You receive a number of RFP responses and about half are from companies with which you’re familiar. From the start, you may have preconceived notions about these companies, their product, and their reliability. Maybe you have friends who have worked at those companies and you’ve heard about their great work culture; perhaps you’ve heard anecdotes about their products on podcasts. Or maybe you haven’t heard about them at all, which makes you subconsciously dismissive of their offering. These experiences contribute to your opinion on the CRM product you have yet to buy before you’ve read past the name of the company. After all, this is the reason that companies invest so heavily in their brand. They want to drive those preconceived notions in a positive direction.

But you know as well as I do that the brand equity of a company and how well their product fits your needs can be two very different things. You may have heard that Company #1 is reliable, but do they have the numbers to prove that their product has limited downtime? Are they reliable for your industry? Do they deploy their application across multiple locations to prevent downtime? The RFP provides a platform for you to ask questions like these, both qualitative and quantitative, and evaluate the responses.

Eliminating preconceived notions will help your RFP process yield the optimal outcome. The benefits of finding the right vendor are significant along subjective dimensions like “fit” as well as objective ones like “ROI.”

Vendors and the Movement Towards Anonymity

What do vendors think of blind scoring and “anonymized” RFP responses? You may be surprised that the majority prefer them, once they truly understand the implications. We’ve spoken with vendors who, when presented with the idea that Vendorful helps buyers run blind sourcing events, have responded with something less than enthusiasm. “I want to write the RFP for the buyer,” we’ve heard more than one say. But the truth is that vendors usually benefit from blind RFPs as well. Most vendors are not the market leader and don’t necessarily have the support of favorable bias on their side. Nor are they, in many cases, the only party trying to influence the process. By having their answers evaluated on their merits, rather than the perceived merits of the supplier or sales rep, they can compete on a more level playing field.

You may be wondering: if blind scoring is “so great,” then why isn’t it used more frequently? Despite the merits of anonymizing responses, few sourcing teams actually go through the trouble of setting up blind scoring. From our conversations with procurement specialists, we’ve learned that there are two primary reasons for this:

The manual process that most organizations undertake is arduous and time consuming enough without adding additional complexity. While the benefits of blind scoring are significant, there is typically a lot of pressure to “get to the finish line” as soon as possible.
Organizations that have adopted software solutions to run their RFX processes are hamstrung by the limitations of the products they use, which don’t typically support any anonymizing.

Implementing Blind Scoring with a Manual RFX Process

Blind scoring can be particularly challenging when running a manual RFX process. First, it’s necessary to get someone who is not an evaluator to collate all supplier responses. If the responses are being compared side by side — a best practice — the person who handled the collation would omit the actual vendor names from the list. Then, after all the evaluators have completed the scoring, the “collator” shares the names and their associations with their respective responses. This takes quite a bit of time and time, as we know, is money. Although blind scoring ultimately benefits the buyer’s organization, the cost of a manual RFX process can undermine the benefit anonymized RFPs.

How Does Vendorful’s RFP Management Solution Solve the Blind Scoring Issue

At Vendorful, we’ve invested considerable resources to allow organizations to run best practice-based sourcing events with unprecedented ease and speed. As such, we’ve built blind scoring into our standard RFX workflow. You literally don’t have to do anything to anonymize your entire process, ensuring that your evaluators are scoring based on the merit of the vendor response for your specific company, not third-party anecdotes or broad market perception.

See how easy blind scoring can be for your team. Schedule a Vendorful demo.

What to ask before purchasing RFP management software?

7 Questions to Ask before Purchasing RFP Management Software

November 8, 2017/in RFP, Sourcing, Strategic Sourcing, Uncategorized /by retaliate1st

At this point, you’re convinced that your purchasing process bears the hallmarks of the problems that come from manually-managed RFPs. You’re shopping around for RFP management software to streamline your process and gathering information just as you would for any other purchase that your team makes. (Maybe you’ll even get meta and run an RFP to find an RFP Management solution!) No doubt, you have your own questions that need answering, but here are seven questions you absolutely need to ask in an RFP presentation before purchasing management software.

1. Does the product have features that will address the

problems I’m experiencing?

Obviously, collating and scoring responses are critical components of understanding the RFP process and any solution that merits consideration should makes those processes easier. It’s also going to be helpful to ponder some of the less obvious challenges that you might encounter when running a sourcing event. For example, how about all of the requirements gathering, vendor discovery work, and documentation that occurs before the RFP is even crafted, much less sent out? And have you considered showing that inbox of yours a little respect? Does the solution help reduce monstrous email chains and manage attachments?

2. How easy would it be to implement this solution across the team?

There are at least two different parts to consider when thinking about what’s involved in an implementation. First, there is the deployment of the software solution itself. Is it a turnkey SaaS setup or is implementing the software going to take coordination and time? Second, you have to think about how long it would take to bring your colleagues up to speed. How much time will need to be invested to train your procurement team? What about subject matter experts who are unfamiliar with procurement? A strong solution should work for all of the stakeholders who get involved in sourcing, whether they work in the procurement department or not.

3. How do I think about calculating ROI when considering an RFP management solution?

Are there certain thresholds in terms of spend or the number of RFPs that must be reached before a solution makes financial sense?

There are companies that spend billions of dollars per years on suppliers just as there are companies that spend thousands. Likewise, there are organizations with robust procurement teams and sourcing specialists along with other organizations where divisional leaders are tasked with doing their own sourcing. As such, there are no hard-and-fast criteria for rationalizing the expense of RFP management software in absolute terms. Instead, it’s advisable to consider ROI in relative terms. A good solution will likely promise to help your organization recover time and reduce supplier spend, both of which should — directly or indirectly — fall to the bottom line. Measured as a percentage of your spend, how much money will you have to recoup in the form of person hours and reduced costs to justify the expense of RFP management software? 5%? 2%? 1%? Figure out the number that makes sense and then work through some scenarios to determine if it’s achievable.

4. Did you skip the RFP process even though you probably shouldn’t have?

Chances are, your current RFPs are a pain. If they weren’t a pain, then you wouldn’t be looking for a solution and probably wouldn’t be reading this article. And pain, at least in this case, costs money. The pain results from bad process; the bad process requires much more time that it should; the time spent belongs to people; those people earn wages. While it’s possible that you’ve elected not to run a proper sourcing event out of pure frustration, you might also have avoided them on occasion because of cost. For example, if you had to spend $10,000 (primarily in person hours) to run a process for a $20,000 product, you would have an ROI challenge with the product before the ink was dry on the contract. The math is pretty damning. Simply take 8 people x 40 hours x $30/hour and we get to $9600. As you can see, it’s not hard to spend five figures on an RFP. Bottom line: if you’re evaluating RFP management solutions based on how many RFXs you run, and how much spend you manage, you need to contemplate the costs of the RFXs that you didn’t run because your process has been a problem.

5. What are your stakeholders looking for in a solution?

What is your procurement team looking for?

While sourcing software is typically going to end up being the procurement department’s bailiwick, they will not be the exclusive users. Indeed, part of the rationale for licensing an RFP Management solution is to streamline the process for stakeholders outside procurement. It’s helpful to have some potential stakeholders — preferably from different departments — sit in on a demo for a sourcing solution and weigh in with their opinions. Ultimately, their “buy in” will be helpful when you begin using the chosen solution.

6. What is the development approach of the company from which you are licensing the software?

Do they push out annual releases? Or do they quickly iterate on requested features?

In evaluating a solution that works best for your organization, you should think about how your needs will evolve over time. Rarely is software static, but the frequency of updates as well as the method of applying them can vary considerably. On the one hand, you might be looking at classic enterprise software that is deployed on your servers. A common model is for the software provider to offer quarterly patches amid larger upgrades, which might occur every few years. The evolution of SaaS-based solutions has changed that model. Those providers run the solution on their own services and offer subscription-based access to it. Release cadences vary, but there is a strong bias towards much more frequent, iterative releases. This allows for a high degree of responsiveness to customers that advocate for the addition of specific features. Finally, there is a hybrid-model whereby a solution that is usually offered as SaaS can be deployed on the customer’s server infrastructure. When implemented thoughtfully, this approach can allow for the same frequent iteration as its pure SaaS counterpart while allowing customers to control the infrastructure. Ask your prospective vendors about their deployment models and development methodology.

7. Is it easy to use?

If the demo you receive is 90% Powerpoint presentation and 10% product focused, you might not walk away with much confidence that the solution will be easy to use. Remember, the scope of a sourcing product extends beyond the procurement team. Stakeholders from different departments — some technical and some not technical at all — could be included in sourcing events that you run. So ask yourself, “Does it look as smooth, simple, and helpful as promised?” And more importantly, “Does it address many or most of the problems I’ve identified with our RFX process?” Modern solutions shouldn’t generally require days of training sessions. Ask if you can run a practice sourcing event. The software provider should stand behind its product. If you can’t try the software before you buy it, there’s a good chance that the software is confusing to use or might be complicated to implement.

We have invested lots of time and money in simplifying what has traditionally a complex process.. Indeed, Vendorful was created from the ground up with usability in mind. So give it a whirl…. You can knock out question number 7 by signing up for Vendorful and trying it for free.