When I got my start in procurement at FreeMarkets, Peter Kraljic’s procurement matrix was a common reference point in explaining what spend to “leverage” (i.e., run a competitive negotiation or auction on) or “automate” (i.e., remove human touch points, decentralize and systematize with something like e-procurement).
In other words, we paid closer attention to what was on the left side of the famous spend segmentation matrix than the right. At the time, the right side of the matrix (“partner” and “bottleneck”) represented spend areas/categories/types that were either off limits, not a priority or not well understood by shoestring strategic teams targeting procurement savings, cost reduction and risk mitigation.
Flash forward two decades, and while both “leverage” and “automate” have pretty much defined 90% of the effort of CPOs in recent years, there’s a new quadrant on the rise: the upper right or “partner” bucket. But it’s not just that we’re paying more attention to the historic “few” strategic supplier relationships in our business — it is that more and more suppliers are becoming strategic to us versus fungible names on a vendor master.
In a series of columns this year, I’ll share 10 theories that I believe will drive investments in earlier-stage (angel/seed and Series A/B) start-ups in the procurement technology market. For perspective, Thesis 1 looked at automation and vendors in that space. Thesis 2 looked at providers of marketplace solutions. Thesis 3 looked at UI/UX technology and adoption in the start-up stage. Thesis 4 dug deeper into bridge solutions. Thesis 5 looked at push savings. Today, let’s dig deeper into the rise of supplier collaboration.
With the growth of an emphasis on strategic relationships and partnering, comes a rising enthusiasm and appetite for investing in supplier engagement and collaboration. This is both in addition to and as a replacement for the time spent on “leverage” efforts primarily centered on sourcing. Put another way, we are either moving out of the Tinder era into the eHarmony one. Or perhaps Jdate, Christian Mingle or Muzmatch are better analogies — after all, this is really about those looking to partner over the long haul vs. well …
In short, we are both replacing and supplementing the episodic with the lasting.
But which technology providers are leading the way at the venture-stage of investment? I asked the Spend Matters analyst team and jotted down some additional names myself. Here goes:
Kissflow — Offers flexible process configurability for supplier ratings, onboarding and more. In its Spend Matters Almanac listing, Kissflow describes itself as, “facilitating joint growth and value-creation (with suppliers) through open communication, transparency and win-win business goal orientation.”
Kodiak Ratings — Provides a nimble supplier management solution, with emphasis on performance and collaboration. As noted in recent PRO coverage, the solution, “Supports SIM capabilities like supplier profiles and scorecards, document management, notifications, and SRM capabilities like supplier action and collaboration spaces.”
Procurence — An ideal collaboration solution for direct suppliers. As noted on Spend Matters PRO coverage, “Procurence was built to manage direct suppliers and track process, quality, issues and resolutions. It has deep support for tracking non-compliance scores down to production sites and batches, initiating quality reviews and tracking progress, defining and kicking off corrective action plans, and doing deep technical assessments of delivered products.”
SupplyHive — While we have previously covered SupplyHive earlier in this series, it warrants a mention as a supplier collaboration solution based on its focus on supplier performance management and improvement. See also Spend Matters PRO coverage.
State of Flux — Both a consultancy and software provider, State of Flux specializes in supplier development and collaboration. As we have noted in Spend Matters PRO coverage, State of Flux’s technology is ideal for “organizations that require a solution to manage overall supplier relationships, including capturing key information to measure, manage and develop suppliers (e.g., risk scoring, KPI management, contract creation and management, and data management, including advanced Excel integration)”.
Vizibl — It is a supplier collaboration platform that we are excited to cover more on Spend Matters in 2021. Vizibl is focused on enabling vendor collaboration initiatives (and reporting) centered on joint cost take-out, revenue contribution and related initiatives. It recently won DPW’s Enterprise award for Demo Virtual.
SirionLabs — Its strength in obligation definition, management and collaboration (especially in support of strategic services spend relationships) as an extension of contract lifecycle management (CLM) make it a worthy addition to this list. As we have noted previously in SirionLabs coverage, “for complex services categories, often the greatest value from procurement engagement comes from what happens after general pricing is agreed to. It is the setting up of obligations as part of contracting and the subsequent active management, collaboration and engagement surrounding them that maximizes savings and compliance, while often aligning the interests of suppliers, as well.” See PRO coverage of SirionLabs.
Tealbook — While we have covered Tealbook earlier in this series, it also warrants a mention as a supplier collaboration solution at the “front-end” of the vendor engagement process based on identifying and qualifying an optimal set of partners. See past PRO coverage of Tealbook.
Suplari — Ostensibly a spend analytics solution (see PRO coverage), Suplari allows for the custom coding of “insights” by supplier to track all spend, feed cost models (based on exp. margins), identify potential fraud, etc. This can provide a basis for direct supplier engagement and collaboration based on actionable data that goes beyond what is typical in spend analysis solutions.
*Disclosure: Jason Busch is an investor in SupplyHive.