January 2020
Last week I discussed the perception some have about negotiating, and the importance of looking past this preconceived notion that negotiations are inherently evil. Understanding that some are likely to change their perception of negotiating, or haggling, there are things we can do to help ease this intrinsic tension.

The reason many people view negotiations as something combative or tense is a predetermined opinion that the other party is looking to pull a fast one on the other. Successful negotiators work hard to tear down this thought throughout every step of the process. First, one must build trust. This may seem obvious, but pleasantries and light banter can do more good than anticipated. Expert negotiators know that by establishing a rapport is critical to establish a lasting, beneficial relationship. And, this is what I believe is at the root of any “Trust-Based Negotiation,” relationships. Ultimately, the goal of any negotiation is to win the deal or realize the right price, but this isn’t where a negotiation ends. Once you’ve signed the deal, you now enter into a dormant negotiation, but a negotiation nonetheless. By signing a contract, you are now in agreement of expected responsibilities. But, if one side isn’t happy with the terms or feel the other party isn’t fulfilling their duties, you now enter into a separate negotiation: proving to the other, or, in the most extreme cases, a mediator or judge that the obligations aren’t being met. Basically, you’re not bargaining again, and this time is a much less pleasant environment.

We as people want to feel valued and that our concerns are being met. Why would a negotiation be any different? Both parties should be transparent about their goals and objectives, but also their concerns. If you aren’t honest with the other party, then how can anything be remediated? Start having open dialogue about both your concerns and your goals early in any discussion. Not only are you being clear with expectations, but you are letting the other party know that you're honest. In short, you are establishing trust during every step of the negotiation. If you give the other party the opportunity to learn about your goals, expectations, and objectives, if they really do want to reach an agreement they will do their due diligence to guarantee your requests are met. An added bonus in this scenario, too, is that the other party thinks they have a leg up on the competition, which should incentivize them to do everything they can to deliver on these requests. No one to blame but themselves if they can’t meet your expectations after you’ve clearly laid them on the table.

Try incorporating some of these tips into your next negotiation and see what results you yield. Extending the golden rule to negotiations can produce some surprising results, and while there is no hard and fast rule on how to win every negotiation or deal, understanding the importance of trust can certainly increase the tools at your disposal for your next deal.

Information Technology (IT) strategic sourcing and procurement is a tough business to be in. Having the skills to understand technology and be able to translate that into business needs and vice-versa isn’t something that is found in the procurement community very often, and frankly, when it is, can be a little underappreciated. 

That said, Source One, a Corcentric Company has had for over twenty years a very strong IT sourcing and procurement practice and have helped countless clients build and sustain IT Sourcing groups either through our Procurement Transformation Advisory or through focused consulting engagements.

Once a company has begun to mature their IT procurement operations where they have put in place strong oversight and processes to track spend, define buying policy, and quell dark (out of sight) purchases, a focus can begin on an IT Vendor Management program for your organization.

It should be noted that most organizations that have a moderate level of procurement maturity likely have some IT Vendor Management activities already in place. However, those activities are often an event-driven, transaction-focused collection of ad hoc vendor interactions, rather than a disciplined program designed to maximize the value received from vendors.

Putting in place a robust Vendor Management program improves performance, provides spend visibility to management, cost controls, cost reduction results, process improvement, compliance tracking and more.
Vendor Management processes also manages potential supplier risk through regular insight into a vendor’s reputation in the marketplace and financial stability.
The most successful Vendor Management programs have a clearly defined vision for success and a means to measure it, as well as a documented governance model. Both must be well socialized in the
organization, well-understood, sponsored and supported by executive stakeholders. And the message must be sent to the entire business that IT Vendor Management aligns with corporate goals and objectives.

Sourcing and Vendor Management leaders looking to build or improve their Vendor Management capabilities should:

  •     Create and communicate a Vendor Management mission and charter by defining the roles and responsibilities of the Vendor Management, IT, and business stakeholders, establish functions and activities, and determine what business outcomes and risk mitigation are expected from vendor partnerships.
  •     Assess the maturity of any current Vendor Management processes against your proposed mission by reevaluating the gaps and priorities that will create a road map for advancing your Vendor Management capabilities.
  •     Gain visibility into what IT vendor contracts exist and assess the current state of vendor engagements.
  •     Assess the organization's roles and requirements for the future state
  •     Define and communicate specific, measurable, actionable, relevant and time-bound goals for the program.
  •     Identify executive support/sponsorship
  •     Segment the vendor base, via metrics define by business value, spending, criticality and risk
  •     Inform priority vendors of the institution of a vendor management program and that their support will be required
  •     Begin to create a reporting mechanism that aligns with executive expectations and company goals. Examples may include service level or KPI results and cost containment/reduction results
Through the course of this year, I’ll be doing a deep dive into the specific areas of standing up an IT Vendor Management organization, including best practices regarding the initial assessment phase, defining roles and responsibilities, a communication plan to inform the business, a vendor performance management plan, as well as other.

In the meantime, just know that solid preparation, assessment, planning, acting, measuring and, above all, communicating can greatly enhance your chances of vendor management success.

C.H Robinson is a multimodal transportation services and third party logistics company.  They have operations in North America, Europe, Asia, and South America.  Due to their large scale, they work with some of the largest companies in various business segments.  C.H. Robinson is committed to expanding their services and easing the way their customers conduct their business.

In September 2019, C.H. Robinson declared their commitment to investing $1 billion into technological innovation projects over the next five years.  This past month, the company has launched their own labs, which they are calling C.H. Robinson Labs.  These labs were created to be an in house supply chain innovation incubator, where logistics and supply chain ideas are created, tested, and scaled.  These ideas will build solutions for 124,000 customers and 76,000 contract carriers.  The reason for the creation of the labs was due to customers and carriers expressing their hunger to C.H. Robinson for tech solutions and wanting a stronger competitive position while increasing their efficiencies.

The innovation labs work closely with 1,000 data scientists, engineers, and developers.  The first goal of these labs is to allow customers to easily integrate their own ERP's with C.H. Robinson's broader market insights.  This will be done through connecting its Navisphere capabilities into leading technologies such as Oracle Netsuite and Transportation Management.  Other objectives of the labs are to enhance a company's pilot phase business intelligence software, develop a benchmarking tool to help shippers predict and reduce lead times, and other features such as real time freight tracking to increase visibility and efficiency across the supply chain.

Currently, Robinson Labs is working on predictive ETA's, reducing empty miles for carriers, and deriving insights to reduce carbon footprints.  They have also partnered with Anheuser-Busch to create an artificial intelligence assisted pricing tool that directly connects the two companies.  The tool prices and accepts thousands of shipments in less than a few seconds without human interaction.

Although it is too new to see the returns on these labs, I am sure there will be positive outcomes that are derived from them in the near future.

In addition to sponsoring the Institute for Supply Management (ISM)’s Annual Conference, Corcentric’s Source-to-Pay team will once again host the ExecIn Forum. A private component of ISM2020’s agenda, the two-day event brings Supply Chain innovators and thought leaders together to network, exchange insights, and discuss the future of their function.

ISM2020, the year’s premier Supply Management conference, will take place from April 26-29 in Boston, Massachusetts. In addition to thousands of industry professionals, ISM welcomes former UN Ambassador, Nikki Haley, and former Secretary of Defense, General James Mattis as keynote speakers. ExecIn attendees will enjoy private sessions with both Mattis and Haley as well as high-impact presentations hosted by Fortune 500 Procurement leaders.

“It’s an interesting time for everyone in Supply Chain Management,” said Joe Payne, Corcentric’s Senior Vice President of Source-to-Pay. “Entering a new decade, our function faces a host of new challenges and opportunities. This should make for the most exciting ISM Conference and ExecIn Forum yet.”

The agendas for ISM2020 and the ExecIn Forum are still under construction. It is clear, however, that attendees can expect a diverse series of presentations focused on “Revolutionary Ideas.” Topics of discussion will include America’s ongoing trade war, the battle to secure world-class talent, and the digital tools each Procurement group should have in its arsenal.

Payne continues, “Past ExecIn Forums have inspired competitors to put aside their differences and work together toward addressing common pain points. I expect this year’s Forum will provide even more opportunities to for collaboration and constructive discussions.”

Will We See You at ExecIn? 

All ISM2020 attendees are encouraged to visit Booth #501 to meet Corcentric’s industry-leading team and more about their approach to sourcing and spend management. Executives interested in attending the ExecIn Forum should reach out to Ken Gaul (kgaul@corcentric.com) for additional information.

Jan. 1 not only ushered in a brand new century, but introduced an array of newly installed laws throughout the country. One of the more far-reaching ones affects the nation's largest state and some of the U.S. economy's biggest industries. While its stated intentions are designed to be a boon to the average worker, business owners believe there could be unintended consequences, particularly as it relates to the supply chain.

The legislation, known as Assembly Bill 5, officially went into effect in California when the clock struck midnight. It concerns independent contractors and stipulates what factors allow companies to treat them as such for tax filing and compensation purposes. Restaurants, marketing firms, ride-sharing providers and motor carriers all heavily rely on independent contractors to satisfy demand for their services.

Although AB5 remains in the early going, the trucking industry is none too pleased with the bill's implementation, unclear about what they must do to remain compliant. They're also confused about some of the lengths workers must go to as well, such as what it means to be "customarily engaged" in an independent trade or business effort. Such uncertainty, opponents claim, will wind up adversely affecting the supply chain.

Weston LeBar, CEO of the Harbor Trucking Association, told Supply Chain Dive that there's been a severe lack of communication.

"This is about as clear as milk right now," LeBar said.

Lawsuit nets temporary stay
One of the biggest opponents to AB 5 is the California Trucking Association, which formally filed a lawsuit against the State of California last November, stating that the bill was unconstitutional. On Jan. 16, the U.S. Southern District Court granted a temporary injunction on AB 5, which in effect stymies the legislation from becoming actionable.

CTA Chief Executive Officer Shawn Yodon hailed the court decision as a good start.
"This ruling is a significant win for California's more than 70,000 independent owner-operators and CTA members who have worked as independent truckers for decades, and who have invested hundreds of thousands of dollars to own their own vehicle and comply with California's strict environmental guidelines and regulations over the years," Yadon said in a press release.

Many California motor carriers are staunchly opposed to AB 5. Many California motor carriers are staunchly opposed to AB 5.
Uber, Lyft oppose AB 5
The trucking industry isn't the only one nonplused by AB 5, which is otherwise referred to as the "ABC test." As USA Today reported, freelance media organizations, tech firms and ride-sharing household names like Uber and Lyft have all taken legal action, or are expected to do so.

Lorena Gonzalez, an assemblywoman who represents San Diego in the California State Legislature, told USA Today that much of the resistance to the ABC test derives, in her opinion, from miscommunication and unfounded claims of government overreach.

There are also fears that AB 5 could make a bad situation worse for the trucking industry, which is still in the throes of a severe worker shortage. Because the legislation alters how much freight contractors can carry per load, the effects could affect profitability. The California Department of Transportation, Governor's Office of Business and Economic Development as well as the California Department of Industrial Relations - all supporters of the law - conceded to Supply Chain Dive that they haven't looked into the potential ramifications on freight capacity.

This blog comes to us from Dan Andrew, Senior Vice President of Sales at Corcentric.

Accounts payable departments are often stretched to capacity, which can leave them vulnerable when the company starts to ramp up quickly. Are you prepared for growth?

Managing accounts payable (AP) can be stressful at the best of times, but when the company is growing fast, things can spin out of control. If you manage AP for a company that is growing, these steps can help you prepare for a fast-paced future.


Adding team members indefinitely easily addresses a growing invoice volume. But at some point, budget constraints will limit the size of your team. When you reach that point, adding the right technology to your workflow can help. In fact, AP automation technology can help you increase your productivity by 70 percent with no added headcount.1

Key technologies to explore include:
  • Invoice scanning with OCR or double-blind keying for extracting data from paper sources.
  • Data validation technologies to minimize errors and exceptions.
  • Supplier portals that support electronic invoices.
  • Automated invoice processing for invoices that match to purchase orders and receipt-of-goods.
  • Automated invoice approval that routes invoices to the right people for approvals.


As the company matures, it can put new pressure on the AP department to collect and analyze invoice and performance metrics. But with 84 percent of a traditional AP department’s time dedicated to transaction processing, 2 that doesn’t leave much time for analytics and other value-added activities.

Automation technology can give you back more time for analysis and forecasting, but that extra time won’t help unless you have people with the right skills on your team. As the AP function transitions from paper-based to data-driven processes, you will need to enhance your team’s skills from data entry and inquiry management to technical and analytic competencies.

Take a look at the talent on your team and look at ways to help them gain the skills they’ll need as the company grows, such as encouraging them to take introductory courses in data analytics or accounting.


Of course, before you can make big changes to the technology and talent that support AP, you need to convince the executive leadership to support those changes.

The good news is that they are likely to be a receptive audience: 91 percent of finance leaders want to improve their AP function’s level of automation.3 The bad news is that they are likely to be focused on reducing costs as the company grows, which is why it’s important to make a strong financial case for the investment in technology.

The best way to do this is to compare the cost of automation technology with the cost of adding to the headcount, since the choice is ultimately between these two options. Automating AP processes enables each full-time staffer to process up to 11 times as many invoices per month,4 so the numbers are in your favor. Calculating the cost of each new staff member (including salary, benefits, training, and the space, equipment, and supplies they’ll require) and comparing it to the cost of implementing automation will help you win your executives over.


As the flow of invoices increases, it’s easy to start feeling overwhelmed. But taking steps to put the right technology and talent in place to support the company’s rapid growth can help you regain control. Growth is a challenge, but it’s also an opportunity.

By finding new and more efficient ways of operating and by turning the information that flows through your department into actionable data, you have an opportunity to elevate your role and your department to a more strategic level as the company matures.
The right consultant can transform your business. Bringing fresh ideas and innovative solutions, they'll help you navigate around common obstacles and identify opportunities you might otherwise have missed. Whether your organization already has a well-appointed Procurement team or is just starting to build one out, a consultant is often the perfect resource.

But what about the wrong consultant? You've probably heard the horror stories. They'll collect their pay, go through the motions, and leave your organization worse off than when they started.

How can you identify a bad fit before bringing them on board? Check out these 6 tell-tale signs from our expert spend management consultants.

Want to learn more about the right kind of consultant? Reach out to our spend management experts today

Almost twelve years ago, our Source-to-Pay experts were staring down a steep economic downturn. They recognized that a bear market isn't just a challenge for American businesses. For the well-equipped, forward-looking Procurement team, it's also an opportunity to evolve and embrace a leadership role.

ISM's Manufacturing Index just hit its lowest point since those dark days and economists and homeowners alike expect we'll see another recession in the near-term future. That means time is running out for Procurement teams to begin safeguarding their organization and devising survival strategies.

Before things take another turn, let's look back at the advice we offered Procurement professionals in 2008. These same best practices should benefit any organization looking to recession-proof its bottom line and enter tough economic times with more confidence.

Recession-Proofing Procurement 

1. Creativity should define every aspect of your approach: From supplier identification and qualification to the contracting and negotiations stage, look for opportunities to innovate and take the business in new directions.

2. Collecting data saves dollars: To maximize savings, ensure your team has access to a wealth of accurate, actionable data. More crucially, make sure your team knows how to turn data's raw information into wisdom.

3. Examining or (re-examining) your sourcing strategy will pay off: Markets change quickly and that's doubly true during tough times. Those organizations that survive and thrive are those that stay on their toes and constantly reassess their legacy processes.

4. Developing a supplier list always adds value: Are you counting on a small pool of suppliers? Good luck. There's no telling who'll survive a recession and you can't afford to limit yourself. Casting a wide net will keep from you relying too heavily on individual suppliers and 

5. Communicate, communicate, communicate: Open communication is everything throughout the RFP process. Keeping your prospective vendors informed and engaged will make them all the more likely to offer savings and innovative solutions. And don't forget - an RFP isn't always your best option.

6. Analyzing responses are often the missing link: Develop a fact-based, objective market picture and plan from there.

7. Only fools rush in: Taking time saves money. Always make the effort to gauge every supplier response and proposal against your own internal benchmarks. Get it right the first time!

8. Measure twice, cut once: Planning and implementing effectively makes all the difference in making expectations into reality.

9. Don't check out: Continuous performance management will keep your suppliers (and your own team) on their toes and promote sustainable value generation.

10. Watch your back while moving forward: Always make sure to keep a careful eye what your competitors are doing both in terms of processes and strategies.

Want to learn more about Procurement's recession-proofing powers? There's still time to register for our upcoming webinar with ISM-New Jersey. Sign up today for the insights you'll need to thrive in Supply Management's next era - whatever comes next.

Wherever retailers sell - whether online or in store - returns occur. This reality of life for retailers is particularly true in the days following Christmas, which were especially busy this past year, as sales topped $730 billion, according to official estimates from the National Retail Federation.

While returns are unavoidable, they're also harmful - both in the financial and environmental sense. Indeed, the NRF indicates roughly $400 billion in goods wind up back in the possession of the companies that sold them. While some of these get placed on store shelves or display areas, much of it eventually find its way to landfills, increasing greenhouse gas emissions into the atmosphere.
In an effort to mitigate these harmful effects, one of the world's largest and most well known furniture manufacturers is leveraging state-of-the-art technology to mitigate supply chain waste.

The American division of Ikea, a Swedish multinational furniture supplier that's been the world's largest since 2008, says it's rolling out return optimization technology in 10 of its distribution centers in the U.S., Environment + Energy Leader reported. In addition, this equipment will also be located in at least four dozen retail stores across the country.

Powered by data analytics and machine learning
The maker of the tech is a company called Optoro. Headquartered in the nation's capital, Optoro believes its proprietary technology can reduce the costs associated with processing returns. This is made possible through data analytics and machine learning capabilities, according to the report.

The retail business is all about enhancing value of products and services, the tech company stressed. Thanks to the power of machine learning, the Optoro platform can predict the best location for units returned. This decision is then relayed to warehouse and in-store on a real-time basis so staff can determine what is the most practical and efficient use of the product.

Ikea hopes to be a 'circular business' by 2030
Becoming a so-called "circular business" - where products remain in the supply chain for as long as possible to maximize their value and minimize waste - is a long-term goal for the kitchen appliance, furniture and home accessories manufacturer. Ikea America Retail President and Chief Sustainability Officer Javier Quinones told Supply Chain Dive that the company is headed in the right direction with return optimization technology in place, perhaps reaching its aim within the decade..

"Optoro's solution will enable us to eliminate much of the waste created in the reverse supply chain, from minimizing the carbon emissions released in return shipping to finding the best next homes for returned items," Quinones explained.

While these efforts are still in the early stages, the money saved - and waste reduced - Ikea experiences will likely determine the extent to which it uses return optimization technology elsewhere. Currently, it operates 430 stores in 52 countries, according to data from the supplier's corporate website. Additionally, it operates 40 factories, where in excess of 9,500 products are developed and eventually shipped to franchisees.

Ikea's parent company, Ingka Group, says it's doubling down on smart supply chain management strategies that support the environment and will happily support other businesses who share their green goals and take actionable steps toward achieving them.

When many people think of strategic sourcing, they think of going to market with an RFP. While many opportunities do call for an RFP, this strategy isn’t all that strategic sourcing is. Think about it from a “rectangle-is-not-a-square” perspective: An RFP is a common element of strategic sourcing, but strategic sourcing, itself, is not just issuing an RFP.

Why am I drawing this distinction? Because organizations that build their sourcing road maps for the year will do themselves a disservice by focusing on just this one tool in the overarching strategic sourcing toolbox. In fact, there are plenty of times where running an RFP may not be the best approach… at least not immediately.

When to Avoid RFPs

Towards this end, I’ve compiled a few scenarios where Procurement may wish to go a different route. If you’ve earmarked a project that sounds like one of these scenarios, take a moment and ask yourself, “is an RFP really the right way to go?”

New, Uncharted Territory

An RFP can be a great thing – when you know exactly what you want. However, many Procurement teams are challenged to identify best-in-class suppliers for products or services that are new to an organization.

In these cases, it can be difficult, if not impossible, for Procurement to develop a detailed RFP, accompanying questionnaire, or fully fleshed-out scope that will be needed for bidders to properly respond.

Look to current supplier relationships to help guide the process. While you may not have a supplier who provides these specific solutions, “nearby” providers will likely have a good understanding of the field and may be able to offer some direction or introduce you to several potential supplier candidates.

Simple, Straight-Forward Buys

Some go-to-market initiatives are simple and clear cut. Let’s say you’re buying commoditized products from a supplier you know and trust. You have no interest in changing suppliers if you can help it… but you’ll need your incumbent to come to the table with cost savings to keep your business.

In these cases, the effort of going to market with a full RFP may be overkill. At a minimum, the decision to go this route is premature. Better to find out what an incumbent is willing to do to keep your business before investing the time needed for a full market event.

Gather benchmark data and engage in direct negotiations with your incumbent. Preface these discussions by letting incumbents know that you’ll go to market if you need to, but would rather they offer a competitive enough bid to make a market event unnecessary. Armed with benchmark data, you’ll know if their opening stance is on target or not.

Complex, Multi-dimensional Offerings

The opposite of the above, some sourcing initiatives are for complex purchases that go beyond commoditized widgets. Think about finding an advertising agency of record or bringing in a tech consulting firm to do a major infrastructure overhaul. Unit price isn’t the only (or even the most important) element of successful buys, here – you need a partner who can carry your organization’s vision through into the future while safeguarding today’s operations.

In these cases, an RFP can be too myopic. An RFP does best when you can break down a supplier’s worth into very discrete/scorable qualitative buckets with a backdrop of price as a major deciding factor… complex and highly strategic relationships don’t work this way, and therefore aren’t well-served through an RFP.

Delving deep into onsite demos, pitch presentations, and planning sessions are going to be critical. Having a market event narrow the field to a handful of suppliers may be beneficial from a time-saving perspective, but don’t hang your hat on three-bids-and-a-buy solving highly complex problems.

Develop the Other Tools in the Toolbox

An RFP is a tried and true tool – however, too many organizations have relied on RFPs exclusively when other tactics may be more beneficial and require less effort on Procurement’s part. Take a deep look at the offerings being procured and the supplier relationships in play today. Select a strategy that will yield the best results – even if they don’t involve an RFP.

While the U.S. economy is firing on all cylinders, thanks in large measure to more effective supply chain management strategies, large swaths of Australia burn. Responders are doing everything they can to get a handle on the wildfires, which have scorched over 12 million acres thus far, according to the most recent estimates from The Associated Press.

Combined with the earth temperatures continuing to edge higher - 2019 was the second-warmest year on record globally, based on measurements from the National Oceanic and Atmospheric Administration - major corporations are going to greater lengths to be more ecocentric in their supply chain strategies.

Nestle decries deforestation
A classic example is Nestle. As reported by The Wall Street Journal, the Switzerland-based multinational food and drink processing company has let it be known that it will no longer purchase soybeans from Brazil from one of the country's largest producers due to suspicions they were cultivated on converted land. Nestle is hopeful that this new policy will demonstrate the seriousness to which they take environmental degradation in general and the damaging effects of deforestation in particular. Indeed, Nestle intends to entirely eliminate the practice from their supply chains no later than 2023.

Deforestation is less common, but still a problem. Deforestation is less common, but still a problem.
Although there is greater awareness about deforestation, why it happens and why it's bad for the planet, the practice is still quite common, particularly in Latin America. According to 2019 data from Brazil's National Institute for Space Research, slightly less than 4,000 square miles were deforested in the Amazon last year. While that's up several hundred miles from 2018, the total is down substantially compared to the mid-1990s, when roughly 11,000 square miles were leveled.
Nestle's more hard-line stance appears to be working. Ruth Kimmelshue, supply chain and stability chief at Cargill - which is one of the world's largest and oldest exporters of soybeans - told the Journal her company is taking every effort to be more green friendly in their harvesting activities.
"We believe we have a strong ethical compass, and we have the obligation to act," Kimmelshue explained.

Hennes & Mauritz, VF Corp. go to similar lengths
Also stepping up to the plate when it comes to becoming better stewards of the environment is Hennes & Mauritz, a Swedish multinational firm specializing in clothing. The company, whose portfolio includes designer retailer H&M, informed its investors and customers back in September that it would cease and desist from purchasing leather hides from Brazil, The Journal further reported. The only thing that could reverse those intentions is if producers' ability to establish their livestock doesn't derive from portions of the country where deforestation is common. Meanwhile, footwear apparel firm VF Corporation, which uses Brazilian leather in many of its name brand dress shoes and sneakers - such as Vans and Timberland - is taking similar measures in Brazil. Approximately 5% of the shoemaker and apparel company's leather supply chain derives from South America's largest nation.

As more businesses and countries take small steps toward building a cleaner, greener planet, the hope is these efforts will pay off in a large way, perhaps evidenced by calmer weather patterns.

The following blog comes to us from Julien Nadaud, Chief Product Officer at Determine and SVP, Innovation at Corcentric.

Contract management – or contract lifecycle management (CLM) – is a software solution that provides full-time, automated contract monitoring and helps optimize each stage of the contract lifecycle. Pretty straightforward.

The bigger question is, why do you need one? That’s also pretty straightforward: Because contracts are the lifeblood of every organization. They manage risk, relationships, even revenue to a degree. They exist to be used – leveraged – in the best interests of your organization, as well as those it does business with.

But consider, even a mid-tier company could have tens of thousands of active contracts stored in computers, servers, flash drives and, of course, file cabinets. Do you know what’s in all those contracts?

Probably not. That’s why every organization needs an effective contract management solution to manage the full contract lifecycle, pave the way to greater risk and spend management, and ultimately, drive bottom-line impact.

Contract management is a full-time, automated contract monitoring system

While it is a commonly held belief that contracts are static “documents that are frozen at a point in time and represent rights and obligations that are to be delivered over a future period,” that’s not the full story.

They are in fact living documents that need to be actively managed from cradle to grave to make sure they are doing what they’re supposed to be doing. Contract lifecycle management (CLM) is the constant process of ensuring that a contract is structured properly and reviewed appropriately, its provisions enforced and intent realized, and its weaknesses recognized and corrected.

Contract management solves problems at each stage of the contract lifecycle

According to IACCM (the International Association for Contract & Commercial Management), at a minimum a satisfactory contract lifecycle management solution must include:

  • A central repository and an enterprise-wide, structured process to manage contract creation and execution
  • The ability to effectively manage contract milestones via automated alerts
  • Automated workflow for contract review and approvals
  • Obligations management capabilities and key performance indicators to improve contract compliance and performance
Beyond that, there is no precise, universally accepted model of the contract lifecycle. Our model views the lifecycle through the lens of business challenges, and we’ve divided it into nine stages: request, authoring, negotiation, approval, execution, obligations management, amendment, audit and reporting, and renewal. This makes it easy to identify a subset of challenges for each stage, discuss their business impact, and examine how technology can meet those challenges and capitalize on opportunities for improvement.

With those entry-level requirements in mind, let’s take a look at what a full-featured CLM solution does in the context of what challenges it’s trying to solve for.

Contract Request

Challenge: Slow cycle time is the number one enemy of contract efficiency. And it begins with how simple or difficult it is to request a new contract, get it into the queue, and route it to the right people with all the required information. This is especially true when an organization has a centralized approach to contracts. Slow cycle times can push revenue into the next quarter and make procurement a roadblock.

Solution: A well-designed contract management solution integrates seamlessly with an organization’s line-of-business (LOB) systems. This makes it easy for anyone in an organization to initiate contracts from within familiar applications and devices, and search for contract-related information they require, eliminating system access as a process bottleneck.

Contract Authoring

Challenge: New contracts don’t use the latest, approved templates or language, which makes it difficult to enforce standards without costly and time-consuming legal review. This creates bottlenecks, or worse, renegade contracts.

Solution: A contract management solution should recognize the fact that most contract professionals like to use Word, and incorporate its formatting capabilities. From there, using a selection of templates users can simply drag and drop language from a library of approved clauses and terms, often with the help of guided tools, to create a contract request, amendment or renewal. In addition to collaborative authoring and redlining features, advanced CLM solutions automate many tasks, like dynamically inserting required language for specific clauses and terms, tracking clause- and provision-level changes, setting alerts, and configuring approval workflows. The goal is total compliance with minimum effort.

Contract Negotiation

Challenge: The natural give and take of reaching consensus on contract provisions means that negotiation inevitably occupies a large percentage of contract cycle time. But communication glitches via fax and email as well the manual comparison of redlined versions to identify what has changed with each iteration and why those changes occurred can add delays that are easily avoided.

Solution: By reading changes in structured metadata and unstructured language, a contract management solution allows users to receive redlined contracts electronically, which can be routed and tagged for review by contract stakeholders. It also enables redlined versions to be compared side by side, often in Word or PDF renditions. A compelling feature of more advanced solutions identifies changes between versions that have not been redlined, which discourages “stealth” changes that can undermine contract integrity. Research by IACCM found that companies which leverage a CLM solution can cut their contract creation costs by 50% or more.

Contract Approval

Challenge: Complex, highly-negotiated contracts frequently require multiple approvals from different functions in an organization. Rules governing industry segment, contract type, dollar amount, number of contracts in force with a particular vendor, and so forth can also add variables to the approval equation. Usually, the more complex approvals become the longer they take.

Solution: More sophisticated contract management solutions provide a dynamic approvals process based on multiple criteria. Through the solution interface, users can tailor parallel and serial approval workflows to match the idiosyncrasies of any contract, which eliminates bottlenecks and minimizes costly delays. The most sophisticated solutions support approvals via mobile devices. This flexibility helps the organization optimize the approval process as business conditions change while maintaining control and enforcing standards.

Contract Execution

Challenge: Compared to negotiation and approvals, execution should be very simple. Yet incomplete approvals and missing signatures often delay this basically straightforward step.

Solution: A contract management solution can control and shorten the signature process through integration with third-party electronic signature applications, which eliminates the need for routing hard copy documents. A solution should also be able to upload hardcopies as part of an essentially automated, electronic process.

Contract Obligations Management

Challenge: No matter how well negotiated, no matter how favorable the terms, the benefits of a contract can be quickly and completely undone by a “file and forget” mentality. Remember, a contract is more than a point-in-time agreement whose constructive—or destructive—life goes far beyond execution.

Solution: Contract management technology can consistently provide two things during the life of a contract: visibility and control. Solution features such as fulfillment tracking, automated alerts linked to expirations, renewals, and key events, post-execution workflows, and sophisticated analytics and reporting help administrators maximize contract value.

Contract Renewal

Challenge: Contract renewal should be a time of opportunity—to refine, improve, and, if necessary, terminate existing contracts. But for many companies, renewal windows simply come and go unnoticed; resulting in opportunities lost and risk created.

Solution: A contract management solution can help companies take advantage of each renewal opportunity by identifying contract renewal candidates, alerting managers in time to act, and automatically creating new contract drafts based on the contract in force.

Contract Auditing and Reporting

Challenge: There is no business document more in need of an audit trail than a contract. But ad hoc, manual processes rarely support the event logging that audit trails demand. Likewise, contract performance reporting requires the systemic capability to aggregate data over time.

Solution: Contract management solutions should give organizations a range of audit and reporting options such as contract compliance alerts, audit tracking at the field level, on-demand report generation, one-click access from reports to contract records, and easy integration with third-party reporting tools.

Contract Amendment

Challenge: Contracts rarely escape amendment. The give and take of commerce ensures that most contracts will undergo modification to reflect changes in the marketplace and in the relationships of their signatories. Without a consolidated view of a contract and all its amendments, it’s difficult to keep track of what has been done and why, particularly in long-standing relationships. This is especially true of master agreements that may have hundreds of amendments, with varying application to different parts of the business.

Solution: As it was in the obligations management stage, a 360-degree view of a contract relationship is essential to managing the amendment process effectively. A contract management solution should provide a single source of integrated data truth, providing an effective view of a business relationship that makes clear the prevailing language and terms across multiple contract amendments and associated documents.

Contracts aren’t static documents; they’re leverageable assets.

To sum up, a Contract Management solution helps an organization gain visibility into and control over all contracts, making day-to-day searching, authoring and contract administration easier, more effective and productive. Managing contracts with one comprehensive tool:
  • Cuts contract cycle time and boosts productivity—easy-to-use tools speed authoring and approvals while reducing the need for line-by-line legal review.
  • Gives greater visibility into deals—properly structured contracts recognize revenue sooner, reduce leakage, and increase opportunities for follow-on business.
  • Ensures compliance—audit and analysis features address the three aspects of compliance: contractual, operational, and regulatory.
  • Optimizes shared data, giving all contract stakeholders new insights into their commercial counterparty relationships.
To learn more about what contract management is and what it can do for your organization, download the CLM Starter Kit from Determine, a Corcentric company.

One of the many challenges that procurement professionals face when developing or transforming their procurement practice, is building out an effective Delegation of Authority policy. As there is no one-size-fits-all approach, creating a policy that both adheres to best practices and fits into the overall company strategy can be a daunting task. There are a multitude of different factors that must be taken into consideration, from the size of the organization in question, the industry it operates under, to the internal structure of the organization. However, there are still several steps that can be taken to make sure the DOA policy you develop works best for your business.

Current State Assessment: Before you start developing a policy, its critical to ensure that all key players have a thorough understanding of the current state of the organization. This includes performing spend data analysis to get a clear understanding of volume and amount of all purchased items. From this assessment, you can identify high frequency/low risk purchases that can be set up for self or auto approvals. Also, make sure you understand the current DoA policy (if it exists) and properly asses what you are looking to change.

Determine Priorities: What is the goal for your organization? Is it to drive user adoption, control and mitigate risk, or both? Understanding what the priority is will help make your policy more focused and effective.

Define Approval Thresholds: Draw out your approval limit hierarchy levels and make sure they align to the overall structure of the organization. This will change depending on the business, but usually thresholds are assigned based on hierarchy to the different roles in business (Manager, Supervisor, Director, VP, CPO/CFO, etc)

While using the steps above as a foundation to building out your policies, also take into consideration a few of the best practices suggested by industry experts below:

Strive for Simplicity

Complicated DoA polices often lead to resistance, as users may find ways to circumvent processes that they find too cumbersome. A easy to follow policy ensures requisitioners are readily aware of the required approvers for their purchases.

Use Existing ERP Data as a Framework

Leverage user data stored in your ERP system as a reference or as the foundation of the policies you create. This will also reduce the amount of manual management required in the future if there are role changes within your business.

Ensure Release Strategy Criteria is Identified and Well Defined

A few to consider are purchasing groups, monetary value and GL accounts purchases will go to.

Consider Security Policies

Ensure security process are in place to reduce risk during transitions of roles or responsibilities. For example, policies should ensure a requestor is not the sole approver of the same item.

Define and consider workflows:

What are the current workflows your organization uses and are these being considered while drafting the DoA? This is often company specific, but below are a few most used:

  • Category Approval - Is the buyer purchasing from the correct vendor at the right price?
  • Management Hierarchy Approvals - As previously mentioned, value thresholds based on company roles.
  • Cost Center Approvals - Ensures costs are being applied to the direct cost center.
  • Strategic Souring Approvals - Defined value thresholds set to determine if purchases need to go out to bid.
Ultimately, a delegation of authority policy should clearly establish organizational responsibility, with assurance that recipients who have been delegated authorization meet the appropriate experience and requirements. Keep in mind that policies should be kept updated to reflect the current state of the business and key personnel are made aware of any changes. By taking the suggestions above into consideration, you should be well on your way to creating an operative DoA policy that aligns with the needs of your business.
Back in July, our fearless webmaster, and noted humorist, Bill Dorn discussed the importance of the “Golden Rule” during any negotiation. His message was simple: Don’t ask for the unreasonable in a negotiation. There are few sentiments I agree with more when it comes to business. And while it is necessary evil, it doesn’t need to be viewed this way.

Whether we like it or not, we all have to negotiate in life and it’s important to refine our skills in order to effectively realize value for our clients and/or ourselves. Some of us have roles that require us to negotiate on a daily basis, and in procurement, negotiation is a crucial part of any sourcing or purchasing process. But, negotiating doesn’t need to have this “evil” stigma attached to it.

Let’s look at what negotiation actually is. In short, a negotiation is a dialogue between two or more parties with a common goal or purpose, with the aim of achieving mutual benefit for all involved. The fact is, though, that most don’t look at negotiating this way. If you’re like me, you dread the day your car finally perishes, in part due to the fact that car buying can be stressful and unpleasant. Why is that? Purchasing a new car should be an exciting and fun experience, but it seldom feels that way when you’re in the middle of a negotiation with the dealership or salesperson. During a training I attended the instructor shared an anecdote about how his father never haggles price when buying a new car, fearing he will be perceived as cheap or greedy. But, the dealership typically expects prospective clients to haggle and negotiate, in fact they build this into their pricing. So when the instructor’s father didn’t negotiate, the dealership was actually pleasantly surprised that they sold a car, to be frank, to a “dupe.”

The moral of this story is that negotiations are more often than not expected and welcomed in certain circles or industries, and for most procurement professionals this is especially true. We as professionals shouldn’t be afraid of perception, like my instructor’s father, when it comes to performing or initiating a negotiation. The other party may already be prepared to negotiate and only set their price to begin any preliminary conversations while still establishing themselves as competitive or a leader (based on their first quote). Moreover, regardless your occupation, negotiation skills are vital and important in everyday life and shouldn’t be ignored even if you don’t negotiate or deal in your current profession.

Now that you’ve established you need to negotiate or reach a deal, what do you do next? You learn how to negotiate effectively. Check back next week where I will discuss how to negotiate effectively and compassionately by building trust and commonalities, in what some call Trust-based Negotiations.

This blog comes to us from Ashley Brizendine, Marketing Manager at Determine, a Corcentric Company. 

The search for a P2P solution (purchase-to-pay) software can be daunting and, quite frankly, mind-boggling. Identifying a tool that best fits organizational business processes, user needs and the desires of stakeholders can be downright exhausting — especially if you’ve never implemented an outside solution before. Knowing some of the key features and benefits to look for in a worthy P2P solution will help make the search a bit more bearable, and empower your organization to choose a tool that everyone will be happy with.
1. Lives in “The Cloud”
P2P software comes in a few different forms. Some organizations choose to build a tool internally, while others purchase software that is then implemented and hosted on-premise. Both of these options come with a higher cost of ownership and, oftentimes, clunky configuration. A best-in-breed P2P solution will offer dynamic cloud-based software. With software that lives in the cloud, the vendor remains responsible for the overall functionality of the tool and partners with organizations to support ongoing business needs and processes.
2. Automates purchase orders
Chances are — if you’re searching for purchase-to-pay software it’s because you’re trying to make daily operations more efficient. And of course, there’s no harm in making things easier for you and your procurement team, either. With that being said, automation is the way to go. An automated procurement process from requisition to P.O. to supplier submission workflow that’s audited, validated and error-free should be a required feature of any solution you are investigating.
3. Configurable
One of the most elusive features to find in a sustainable P2P solution is configurability. Due to major differences in business processes from one organization to the next, a cookie-cutter software solution seems like an easy fix, right? Unfortunately, these typically require a great deal of process adaptation and change management on the buyer’s side. The right P2P tool will enable its users to adapt the solution to their workflow and business needs — not vice versa.
4. Exists as a single source of data

If you’ve been in the procurement space for some time, you’ve likely heard the stories about nightmarish processes where the entire purchase-to-pay stream was spread out amongst various tools, departments and approvers. Some of the benefits of having a single source of data include:
  •          Promotes collaboration between requisitioners and suppliers
  •          Improves user adoption
  •          Helps control spend and maverick buyers
  •          Monitors performance, compliance and risk

5. Provides visibility into process and data workflows
Going from catalog to payment is a chain reaction — a group of processes running in series and/or parallel for both the goods or service and the order/payment processing. The ideal P2P solution will provide a dashboard of sorts, giving needed personnel the visibility into each step of the process while streamlining governance, capturing savings and gathering data for later analysis. This increased visibility enables your procurement team to be more intentional in sourcing goods and services while expanding cost-saving efforts.
6. Catalog Management
What good is a fancy new procurement solution if it doesn’t actually make things easier? Catalog management is all the rave these days (at least in procurement). Top of the line procurement solutions will give users easy-to-navigate, simple search and purchase capabilities. Think about searching for something on Google, or buying something from Amazon — the idyllic experience — just in your P2P software.
7. e-Invoicing
While not all procurement solutions include e-Invoicing, there are some out there that offer it. Essentially, e-Invoicing is the automation and alignment between procurement and accounts payable. It helps speed up the payment portion of the purchase-to-pay cycle while maintaining visibility and compliance. You may not find this to be a necessity when looking at various P2P software, but it proves beneficial if you are looking to enhance payment control and overall responsiveness to invoices.
8. Built-in reporting capabilities
Automated reporting capabilities, as well as the ability to build independent reports, is a feature that is much-desired by procurement professionals. Built-in reporting provides users with strategic insight and control over real-time savings and spend management. P2P tools that capture important data throughout the purchase-to-pay lifecycle assist in monitoring performance, compliance and risk — and bring us to the Holy Grail of procurement…
9. Spend Analytics
What is your quest? To seek the Holy Grail! Which in procurement is, of course — savings. Best-in-breed P2P solutions will have embedded reporting capabilities to capture real-time data on savings, supplier spend, spend by region, and much more. This data is then analyzed and put into a digestible format so that you and your team can improve efficiency andcompliance, uncover maverick spend, and save more money for the organization.
10. Integrates with other tools
The benefits of having the right P2P solution in place can reach far beyond procurement, especially if the tool has the ability to integrate with other systems and/or exists on a platform that includes other modules that may impact procurement processes and efficiency, such as contract management, supplier management and sourcing.

In recent years, supply chains have become increasingly complex and, as a consequence, produced more data for companies to interpret. That need for additional interpretation - so firms  can make the most informed decisions about everything from partners to purchasing - comes with a cost. It may take even a highly qualified person dozens of additional hours to figure out what all that extra information means, whereas it would take a software program based around artificial intelligence mere seconds.

For that reason, AI has increasingly become a critical weapon in the arsenal of many companies at various steps of the supply chain, including industry titans like pharmaceutical giant Merck, according to CIO. Simply put, companies of all sizes have a financial incentive to improve the efficiency of their supply chains, and for larger firms in particular, the areas for investment - when taken correctly - can lead to notable improvements in the bottom line.

Interpreting data more effectively will be a boon to any business in the supply chain.Interpreting data more effectively will be a boon to any business in the supply chain.
As connected supply chains generate more data through additional buy-in, AI systems can quickly and easily identify patterns - and thus, potential inefficiencies - in that data far more quickly than a human could, the report said. As such, global investment in not only the technology that generates this data, but the AI that makes it actionable, is surging across the industry.

Positive and negative data
Data itself is a simple statement of fact; in some cases, those facts can be great for a business while in others, it can highlight a serious issue, according to Transforming Data with Intelligence.

Consequently, the more companies can do to make sure they cultivate and collect data on an ongoing basis, the better off they will be as it relates to seeing where they stand, and potentially identifying trends before they even arrive.

Just like anything else, there are ripples caused by any change in a supply chain, the report said. If one logistics firm three steps away in the supply chain has a two-day delay in its operations, that will be felt - potentially with magnified impact - at every additional step. Being able to see such an issue arising - thanks to AI - gives partner companies the ability to react with greater agility.

Working hand in hand
Because AI is increasingly common, it's also vital that companies do more to make sure they collect as much data as possible through devices connected to the internet of things, according to Business Insider. Global spending on AI is already surging, but for many businesses, that expenditure should be accompanied by a solid investment in IoT tech to ensure the full value of both is realized. Of course, many firms see that value proposition as one worth pursuing in the years ahead; while global IoT spending is expected to hit a little less than $250 billion this year, it should rise to as much as $450 billion by 2023.

Any supply chain participants that have not made at least some investment in these tech options within that time frame may find themselves falling behind the competition in short order.

As Procurement and Supply Chain professionals stare down an exciting new decade, our Source-to-Pay experts are once again sharing reflections and predictions in a new whitepaper. Procurement in 2020 sees the spend management leaders comment on the last twelve months and discuss the trends and topics that will define Procurement in the 2020s.

What's Next for Procurement? 

This time around, the Supply Chain thought leaders focus on subjects including: 
  • The ongoing conversation around sustainability and the perils of inaction
  • Ethical sourcing and its benefits for recruitment, customer satisfaction, and company culture. 
  • Procurement's essential role in promoting ethical behavior, driving visibility, and protecting corporate reputations. 
  • The considerable benefits of purpose-driven Procurement and Supply Chain Management.
  • Procurement's various talent gaps and the ongoing battle over world-class professionals. 
  • Digital transformation, its benefits, and the numerous obstacles in Procurement's way. 
That's just a small preview. To learn more about the exciting (and uncertain) future ahead, download Procurement in 2020 today.