As commodity, manufacturing, shipping and labor costs continue to rise and revenues continue to flat-line, buyers, suppliers and e-procurement must come together to find new ways to save. This means looking beyond the “price tag” and exploring how to enable smarter spending, automate workflows, take advantage of value-add supplier networks, and eliminate inefficient manual processes.

Watch this on demand webinar and discover how:

MSI has automated 65% of its purchasing process to empower spend control and visibility.CDW-G is enabling customers to directly integrate for more convenient catalog shopping, direct punch-outs and electronic requisitions and invoices.Coupa e-Procurement is providing the foundation for better buyers and supplier relationships.

We exhibited and had a great event, meeting old friends and making new ones. Here’s what our booth looked like (click to get full size image):

My favorite topic at the show was Green Purchasing. This is such a complex and important area that it is fascinating to wade into and learn the real challenges firms are wrestling with. One attendee who was a high-volume wine manufacturer shared his challenges of vendor “green-washing”. It was tough to know what the truth was on the sustainability of his supplies and the alternatives he was considering.

St. Louis was a fun place for the event. The Arch is a must-see, and Busch Stadium runs a close 2nd. And for those new to Purchasing and Supply Management, the ISM is a great organization to network in & learn from. So consider joining- follow this link to their signup site.

I’ve seen discipline exercised in different ways at different firms. Some very large firms, so used to managing to quarterly expectations, would sometimes turn off their purchasing & travel expenditure programs to control spending. “There’s a travel & buying freeze” they’d say. But these firms already had effective and disciplined buying habits in place.

For small and midsized businesses so intent on growing the top-line, inefficiency and wasteful spending sometimes run wild. These firms can rein in uncontrolled spending quite rapidly through automating and streamlining their corporate purchasing. Coupa can help – with one of the easiest and most affordable on demand e-procurement systems out there. All you need is a web browser to get started. And a desire to maintain profits in turbulent economic times.

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We’ll start with a simple question that has a surprisingly un-simple answer: Should healthcare providers prioritize quality over efficiency when in comes to patient care? Yes, you say, of course! But what does that really mean? Let’s take this question past the typical sound bite by using a specific example -

Discussion Point: Orthopedic casts

There are two different “technologies” used in the casting process. The casts are most frequently made from plaster, but fiberglass bandages are viewed as an increasingly popular and more modern alternative.

So what if you take a fresh batch of physicians, straight out of medical school, and plug them into a system where plaster is mandated (let’s say due to the presumption of lower cost due to “part” and “procedure” standardization)? Let’s say these newer physicians are inexperienced in plaster because they’ve always used the “newer” fiberglass bandage method in their residency programs. What you’ll most likely find is both quality and efficiency of casting by these new physicians is very low. Compound that with a low frequency of performing the casting procedures, and you’ll realize it will take a long time for proficiency to rise to adequate levels. The original goals of standardizing will have failed – costs will be higher, procedures will take too long, and quality of care won’t be high enough.

The obvious answer, to use fiberglass for casts, has a hidden problem. The hidden problem is the more senior physicians. They have used plaster for years and are very proficient at it. These physicians can give a higher quality of care at a lower cost using plaster – without a doubt. Not only that, they may have a perspective that fiberglass is not as good as plaster and may be fairly unwilling to move to what they view as a lower quality method of casting.

At this point some hospitals and clinics just give up and carry both fiberglass and plaster. And maybe that’s the right decision. Perhaps over time fiberglass may displace plaster altogether. What is the real cost / benefit for pushing one method over the other, especially once the true costs of switching for your professionals are factored in?

Conclusion for Healthcare organizations adopting e-procurement initiatives

An efficient e-procurement program recognizes the need for a high quality of care and supplies the necessary goods to practitioners even if it means sacrificing on the admirable goals of part standardization. We’d assert that being flexible with physicians results in lower total cost by reducing rework and increasing the operational efficiency of a healthcare organization’s high value assets (its professionals).

The same story can be told across a wide variety of supplies and procedure kits. From sutures to bandages, from scalpels to IV needles, the best supplies are those that your physicians and nurses are most comfortable using.

So consider your e-procurement goals before embarking on your programs in healthcare organizations. Focus first on convenience. With e-procurement your cycle times for receiving materials should be cut by weeks. Focus next on inventory management. With e-procurement you should have a much better handle on min/max reorder points and on your inventory levels and carrying costs.

And then where you can do so without impacting quality, reduce costs further by standardizing – with care.

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YES they are! The primary reason has to do with audience. Open source software appeals to a tech-savvy crowd who often serves in IT departments inside businesses. On demand software, or a SaaS approach, appeals to a business crowd who intentionally shy away from anything too technical & focus on results.

On the surface if you look at a comparable market to Procurement, like CRM, you see companies that have chosen one or the other. Salesforce.com is the poster child for SaaS. SugarCRM is the poster child for open source.

But dig deeper into their models and you find these two companies have a lot in common. Salesforce has active open source projects around adapters to Order Management and in other relevant places “around the edges” of their infrastructure. The offer and re-host a number of “free” plug-ins through AppExchange as well. SugarCRM, meanwhile, has a growing on demand business as “an alternative to Salesforce” (and RightNow & others).

To me, the underlying trend behind both models is transparency. Open source says “hey, go ahead, look at the code & see that it’s good. contribute back if you can – but there’s nothing we’re trying to hide.” SaaS / on demand says “buy a 1-year subscription and let me show you the business results – there’s no lock-in – no games.”

For Coupa, sponsoring the e-Procurement Express open source project has helped us get valuable feedback on ways to improve. At the same time it’s helped organizations with a very limited budget for e-Procurement pursue the initiative anyway. It’s also ensured the kernel of our on demand service – the core transactional engine – is rock solid. The on demand service, meanwhile, has blossomed very nicely since our formal launch last October 22nd. Transaction volume is scaling quickly, and the business audience has been attracted to how quick and easy it is to get started.

So for us, on demand and open source are like peas and carrots. Open source and on demand are complimentary and both serve us well.

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Amazon’s technology division is called Amazon Web Services and they held an event at Stanford yesterday called the Start-Up Project. They did a nice job of showcasing their capabilities, but mostly let some of their customers give real feedback on using AWS. AWS is composed of a bunch of services to enable what Amazon loves to refer to as “Web Scale” computing…essentially, scalable, reliable, cost-effective storage and computing. The core services of AWS are S3, a low-cost storage service, and EC2, essentially a virtual data center.  These services allow companies to spin up computing power when you need it, and ratchet it down when you don’t.  So rather than buying some servers and running them in a data center hoping that demand stays within your servers’ capacity, you can use AWS and add more virtual servers on the fly and take them offline when demand decreases.  You pay for what you use.  You can probably find some similarities / analogies in the procurement space.  Amazon doesn’t want companies to focus on the ugly stuff (buying equipment, getting your data center up and maintaining it, etc.) that every technology company needs, but wants them to focus on their unique service that differentiates them.  The AWS motto is “We make muck, so you don’t have to”.

Several companies did a quick overview on how they use AWS.  Jon Boutelle of Slideshare did a particularly funny take on  it, although you may not get it from his slides.  Smugmug’s CEO showed how they saved $692K in the last year with AWS.  Then Randy Komisar from KPCB talked about the development process in startups, getting early feedback and the “dashboard” or iterative development process.  His point was that startups can do this now with lots less capital and time than was possible ten years ago.   At the cocktail hour, Jeff Bezos, CEO of Amazon, and John Doerr, the legendary VC, made surprise visits and speeches.

Why was Coupa there?  Simple.  We’re an AWS customer and wanted to see how some of our peers are getting value.  From backup, storage, hosting and more,  AWS frees us from the muck, allows us to have a scalable, reliable infrastructure for our on-demand solutions.  We can focus on new feature development and customer service, not spending time in a data center plugging in cables.

“Enhanced Special Approvers” is a cool feature to build approval paths without all the complexity of getting someone technical to write custom workflows.  Now, you can create all kinds of normal and crazy rules, in addition to using normal management hierarchy, to make sure the right people approve the right requisitions.  For instance, you can say “in addition getting normal management approvals, I want any requisition over $2,500 that is charged to an asset account to be approved by Tim the Controller and if it is over $15,000 then it also needs Sue the CFO’s approval.”  That’s a pretty normal one, but you can make create your own crazy rules based in item description, requisition amount, supplier, department, account and more.  And you can even specify if these special approvers should come before or after the management hierarchy.  Best of all, business users can create these rules in the Coupa UI.

“Line-Level Accounting” is one of the highly requested capabilities that we’re excited to announce.  Now, when you checkout, you can charge the requisition to multiple internal accounts.  So, if I’m buying a computer and some office supplies, I might charge the computer to an “IT equipment” account and the office supplies to an “indirect supplies” account.

“Advanced Search” is one of the features designed and developed by David, our head engineer, who wanted an elegant way for our customers to create queries in the system.  For all of the tables, such as viewing requisitons, purchase orders, invoices, RFQs, you can now do advanced searches in addition to the basic search.  So you can now create a search to find all requisitions where the requisition was submitted between 8/23 and 9/4 for Dell from department ABC.

There are a bunch of other new features including delegate approvals (great for when you are on vacation!), allowing certain approvers to edit a requisition when they are approving it, enhanced price precision so you can buy stuff for less than a cent (needed for our E&C customers who buy cabling at 1.0549 USD) and many more.  We’d be glad to give you more details…just fill out the Contact Us form on the site.

Last, but certainly not least, is the value of On-Demand.   Two weeks ago, we let our customers know about the new capabilities that would be coming.  And last Friday night, we upgraded all of our customers, so by 10pm, they immediately had access to all these new features.   Our customers didn’t have to worry about getting the right patches, getting IT to install them in the right order, running all the data migrations, bringing back up the application, web servers, mail servers, etc and all the associated monitoring.    They can focus on the procurement business processes, not a slew of technical requirements.