The Exchanges

Q he can make sure that I don't get a new business. So with that said, um, How should someone go about doing due diligence on these third party providers to make sure they are legit? What are some specifics that they should think about and questions they should be asking or documents, things that they should be looking for and requesting and not, you know, demanding before making any decisions?

A Kind of depends on what you're acquiring and who's acquiring it, right? There are a lot of processes that organizations have built now to make sure the company is stable, legit, and has an appropriate business process. So for example, make sure their financial stability is sound. How do you do that? Well, if they're publicly traded, you can just pull that data down and find out yourself, right? Number two, if they're private, get audited financials to make sure that they're liquid, make sure they have the capital positions that you want them to do. And when we were, when, when I worked for banking, they kind of said, look, if the, if the company's critical, pretend the pretend as though you're lending them a bunch of money.

AI assessment note: “if they're private, get audited financials to make sure that they're liquid”

Q What part in a company's life cycle would procurement be become something that's like important to think about?

A Typically what I've seen are procurement organizations can be relevant in some way, shape, form or fashion. As you start managing expenses, For suppliers in the 50 to one hundred million dollar range, right? It becomes kind of substantial. It also depends on the business that you're in. So for example, if you're in financial services, you know, these things are mandatory, you, you know, at a certain point in time. So if you're dealing with customer data, if you're dealing with, uh, financial transactions, like managing your third parties become that much more important. Um, I would be surprised, although it happens from time to time to see companies with, you know, that are billion dollar companies and they have no procurement organization, right? So it's a wild, wild west. You know, everybody goes out and picks their own. Uh, and then at some point in time, they have to come to a reckoning of, of trying to get cost out or they have a fraud or they have some sort of incident.

AI assessment note: “As you start managing expenses, For suppliers in the 50 to one hundred million dollar range”

Q see them very clearly and we need to not do that thing anymore. And, um, so yeah, I'm, I'm hopeful that, uh, the rest of the 20 twenties and beyond will be really exciting in that regard, pushing out the old and letting the new come in. And I think AI will have a big place in all of that. Do you guys have any AI in your processes or?

A Uh, not as of yet. We are, you know, we're crowdsourcing a lot of data. And, and what we're looking for are trends and patterns that, uh, we can sort of say, all right, in, in IT services, or, you know, you picked, you picked on Slack, so I'm going to pick on Slack too, right? You can say, all right, so the average Slack contract is going from X dollars to Y dollars, like sort of decreasing by X percent over time, like those kinds of things, like we want to be able to, to, to map out and so on and so forth, but we don't have the critical scale of the data yet, but we're definitely modeling it out. Um, we're a bit premature for that. Um, but it's, it's kind of neat, right? Cause once you get these large data sets, you can see like how much is the procurement organization pushing through in terms of per, per FTE. Um, what is the risk they're taking on? What is the supplier performance on average? Like you get all this data and it's pretty cool, right? Uh, where you can start mining it and really provide intelligence back to companies. And I look forward to that as well.

AI assessment note: “Uh, not as of yet. We are, you know, we're crowdsourcing”

Q So in the case that something goes wrong, what are those audits look like?

A Depends what goes wrong, right? So I worked for a bank once upon a time. And we, you know, before I, before I joined the organization, the, um, the, the bank had decided that they were gonna have ATMs, you know, cash machines, uh, you know, they get serviced by equipment manufacturers, but they also need to get cash delivered. And this bank had the idea of we're going to have our equipment manufacturer, equipment providers also manage our cash delivery. And at some point in time, four years into the agreement, uh, basically it turns out that there was a Ponzi scheme going on and we were out 20 point, some, some twenty million dollars, right? The music stopped, the Ponzi scheme couldn't, it couldn't, couldn't keep up anymore. And basically we were out twenty million dollars. Uh, at that point in time, you can imagine audit and internal Affairs ascended onto the procurement organization, like what went wrong here, guys? And really, it involves procurement about how the organization got into this, uh, quagmire to begin with, uh, what internal processes were done on the cash management side to make sure that, you know, you have to clear, you have to basically balance your books every, every day. Clearly that, that wasn't being done properly, right? Because how do you, how do you, how do you short twenty million bucks?

AI assessment note: “audit and internal Affairs ascended onto the procurement organization, like what went wrong here”

Q How can you identify who are the right stakeholders and how can you communicate with them and manage all of this?

A That's part of what we're solving here at focal point. So making sure you have a structured process that is repeatable, but adaptable to Do what you're buying. So you, we talked a little bit about risk. We talked about criticality. We talked about ESG. We talked about diversity and inclusion. So you need to make sure that all of those factors are. Flexible in your process to make sure that if you're buying something that is a commodity that is, uh, non-critical to the organization, then you take, you know, this path and you involve these stakeholders and you get these sign offs along the way. That way in a structured process, there are no, uh, what I would call surprises along the way. And as you then sort of think about the more complex buys, but let's say you're outsourcing human resources processing or onboarding, whatever the case may be, right? Highly sensitive, highly critical to the phone, to the organization. And if data goes waywards, it's a lot of risk, right? Then you can say, all right, you need, you need to make sure all of these things are done buttoned up properly and, and, and that you, that process is followed and the mistake people sometimes do. Is take that commodity low criticality scenario and apply the, the, the more complex, uh, type or, uh, acquisition method to it. And that makes it challenging, right? Cause you know, procurement people are risk averse …

AI assessment note: “making sure you have a structured process that is repeatable, but adaptable”