Shared Marketplaces Increase Procurement Power

By Scott Walls

Organizational marketplaces are either dedicated or shared.  Dedicated marketplaces provide purchasable content to one SRM application, whereas shared marketplaces provide the same purchasable content to multiple SRM applications (regardless of vendor – SAP, Oracle, PeopleSoft, etc.).  Dedicated marketplaces have long been the standard, but newer, shared marketplaces are allowing consolidated purchasing organizations to negotiate cross-organizational purchasing content and broadcast that pre-negotiated content to all sub-organizations simultaneously.  For example, the State of Georgia negotiates contracts at the state level and uses SciQuest’s Spend Director to broadcast that content to its 123 agencies across many different applications and instances (4 major instances of PeopleSoft alone).

 

Dedicated Marketplaces

Organizational marketplaces being accessed by a single SRM application are referred to as “dedicated marketplaces”.  In fact, the term “organizational marketplace” implies a one-to-one relationship between the marketplace and the SRM application accessing it. 

All dedicated marketplaces share the following characteristics:

• Instances – accessed by one SRM instance/application.
• Data Mappings – one-to-one mappings of shiptos, suppliers, and contracts between the marketplace and the SRM application.
• Reporting – detailed acquisition reporting comes from SRM application.
• Order Transmission – supplier details stored in SRM application and orders transmitted from SRM application.

  

Shared Marketplaces

Organizational marketplaces being accessed by multiple SRM applications are referred to as “share marketplaces” (i.e. the marketplace is being shared by multiple SRM applications).  Shared marketplaces are a new, more complicated, marketplace model due to the content being synchronized across multiple applications (multiple mappings for suppliers, shiptos, contracts, etc.).  This model has been created to support the aggregation of purchasing power across multiple sub-oragnizations.  Shared marketplaces allow multiple SRM applications, regardless of vendor, to access the same purchasable content (see Figure 1 below).  Best of breed procuring organizations are using shared marketplaces to aggregate/leverage spend across organizations/firms/agencies in an effort to gain dramatic efficiencies.  

All dedicated marketplace share the following characteristics:

• Instances – accessed by multiple SRM instances/applications.
• Data Mappings – one-to-many mappings of shiptos, suppliers, and contracts between the marketplace and the SRM applications.
• Reporting – detailed acquisition reporting comes from the marketplace (serves as consolidated view across SRM instances/applications).
• Order Transmission – supplier details stored in marketplace and orders transmitted from marketplace.

NOTE: smaller organizations/agencies who do not have traditional, open architecture SRM applications may view the purchasable content via the marketplace’s “window shopper” mode.

Figure 1  Shared Marketplace Model

One Virtual Marketplace Being Shared by Multiple SRM Applications

 

 

About SRM Plus

SRM+ is a boutique procurement business consulting firm.  We provide procuring organizations with the strategic and tactical consulting services required to dramatically reduce operational expenses, create revenue streams (1 million per every 200 million in spend), and decrease their Cost Of Goods Purchased (COGP).  Whether defining a strategy, creating measurable objectives, designing / deploying solutions, or creating a continual improvement framework, SRM+ wants to turn your cost centers into cash centers.  Visit us at www.srm-plus.com.

Supply Integration Solutions & How They Add Dramatic Value

By Scott Walls

Supply Integration Solutions refer to best of breed, niche, third party tools, applications and services (think content management, esettlement, etc.).  These solutions provide dramatic value enhancements for procuring organizations (and often their supplying organizations) when integrated with traditional SRM applications (SAP, PeopleSoft, and Oracle).  SI solutions have been created to address some of the natural limitations with traditional SRM applications and/or the application provider’s business model. 

This BLOG post provides brief explanations of both the SRM limitations and the related SI solutions.

SI tools are mini-apps (pages and/or process) deployed within the traditional SRM application toolset or using SOA technology.  One size fits all SRM applications can make simple processes appear complex for smaller volume clients.  These “mini-apps” reduce that complexity.  For example, the different cataloging methods within the traditional SRM applications’ requisition process (internal item master, external hosted catalogs, external punch-out catalogs, etc.) confuses the non-procurement savvy requester.  Multiple third-party tool providers have created mini-apps that present one, simplified requester interface, allowing the requester to locate product based on description, without even understanding what an item catalog is.  Because these mini-apps reduce the cataloging complexity, they increase the number of cataloging options available to procurement, increase the amount of content being displayed, and increase the request adoption of the traditional SRM application.

SI applications are external applications that integrate with the traditional SRM application; usually via XML or another standard protocol.  The best of these applications tend to be micro-focused (think external marketplace/item repositories).  They often provide additional, more mature functionality then their traditional SRM counterparts.  In some cases, they also allow multiple SRM applications to access the same functionality/data simultaneously.  For example, content repositories (AKA organizational marketplaces) allow procurement the ability to source purchasable content and make that content available to one or more organizations/SRM applications simultaneously (see Organizational Marketplaces – Shared Vs. Dedicated).  In addition, the content management tools within these third-party applications far exceed their traditional SRM counterparts.  These applications and tools not only allow for better content and easier content management, they pave the way for outsourcing the content management process all together (see the services section below).

SI services, also referred to as “managed services”, are external services that integrate with the traditional SRM both technically and functionally.  These managed services allow procuring orgs to leverage assets they could not create organically (i.e. the Visa settlement infrastructure) or share the management of costly setup/transaction value maintenance (content management/invoice entry).  For example, traditional SRM applications require procurement organizations to setup, test, and maintain all internal item catalogs, external item catalog URL connections, and forms.  Multiple third-party service providers offer external organizational marketplaces procuring organizations can connect to once and the third-party will not only create and manage their content (the “you source, we enable” model), they will work with all potential suppliers from B2B concept initiation through content sunset.  This allows the procuring organization to completely outsource the creation and management of purchasable content at a fraction of the cost of employing the resources.

NOTE: For more information related to Supply Integration, see BLOG posts Supply Integration and Supply Integration Touch-Points.

About SRM Plus

SRM+ is a boutique procurement business consulting firm.  We provide procuring organizations with the strategic and tactical consulting services required to dramatically reduce operational expenses, create revenue streams (1 million per every 200 million in spend), and decrease their Cost Of Goods Purchased (COGP).  Whether defining a strategy, creating measurable objectives, designing / deploying solutions, or creating a continual improvement framework, SRM+ wants to turn your cost centers into cash centers.  Visit us at www.srm-plus.com.

Organizational Marketplaces

By Scott Walls

Organizational Marketplaces are centralized, web-based content repositories where the providers of organizational purchasing content (buyers, sourcing specialists, deal managers) make their content available to consumers of organizational purchasing content (employees, temps, requesters).  Most often, purchasable content has been pre-negotiated by the providers, on behalf of the organization, for the benefit of the consumers.   Providing pre-negotiated purchasable content lowers an organization’s overall costs of goods.

Organizational marketplaces can be dedicated or shared.  Marketplaces accessed by one SRM application are referred to as Dedicated Marketplaces whereas marketplaces accessed by multiple SRM applications are referred to as Shared Marketplaces (for more on dedicated vs. shared marketplaces, see the BLOG entitled Organizational Marketplaces – Shared Vs. Dedicated).

 

About SRM Plus

SRM+ is a boutique procurement business consulting firm.  We provide procuring organizations with the strategic and tactical consulting services required to dramatically reduce operational expenses, create revenue streams (1 million per every 200 million in spend), and decrease their Cost Of Goods Purchased (COGP).  Whether defining a strategy, creating measurable objectives, designing / deploying solutions, or creating a continual improvement framework, SRM+ wants to turn your cost centers into cash centers.  Visit us at www.srm-plus.com.

What are Supply Integration Touch-Points?

By Scott Walls

Supply Integration Touch-Points refer to the points where buyer, supplier, and related third-party processes intersect as those parties exchange information (addresses, terms, order updates, payment inquiries, item catalogs, etc.), money, and goods/services (see below).

Supply Integration Touch-Points

NOTE: For more information related to Supply Integration, see BLOG posts Supply Integration and Supply Integration Solutions.

 

About SRM Plus

SRM+ is a boutique procurement business consulting firm.  We provide procuring organizations with the strategic and tactical consulting services required to dramatically reduce operational expenses, create revenue streams (1 million per every 200 million in spend), and decrease their Cost Of Goods Purchased (COGP).  Whether defining a strategy, creating measurable objectives, designing / deploying solutions, or creating a continual improvement framework, SRM+ wants to turn your cost centers into cash centers.  Visit us at www.srm-plus.com.

What is Supply Integration?

By Scott Walls

Supply Integration refers to all interactivity between buyers, suppliers, and related third-parties as these parties exchange information (items catalogs, supplier addresses, payment terms, order updates, etc.), money, and goods/services. 

Wikipedia defines Supplier Relationship Management (SRM) as the “discipline of working collaboratively with those suppliers that are vital to the success of your organization”.  This definition omits any involvement or value related to third-party providers of solutions such as SOA tools, content management services, and/or settlement management services.

With an ever-increasing number of best of breed, niche, third-party tools, applications, and services adding ever-increasing amounts of value to the traditional SRM paradigm, the industry needed a term with a broader context.  Supply Integration is that term.  It was created specifically to incorporate third party interactivity with the traditonal SRM paradigm.

 

For more information related to Supply Integration, see BLOG posts Supply Integration Touch-Points and Supply Integration Solutions.

 

 

About SRM Plus

SRM+ is a boutique procurement business consulting firm.  We provide procuring organizations with the strategic and tactical consulting services required to dramatically reduce operational expenses, create revenue streams (1 million per every 200 million in spend), and decrease their Cost Of Goods Purchased (COGP).  Whether defining a strategy, creating measurable objectives, designing / deploying solutions, or creating a continual improvement framework, SRM+ wants to turn your cost centers into cash centers.  Visit us at www.srm-plus.com.