Introducing “VRM” - the Procurement Tool of 2021
In 2020 we were all reminded that no enterprise operates in a vacuum. Large and small, public or private - all enterprises rely on suppliers and vendors to produce and deliver products and services to customers.
During times of crisis or instability, supply chain and procurement professionals are relied upon to keep in step with demand. In times of calm, the same professionals are leaned on to find value by making supply chains leaner, improving the depth of supply, reducing risk and finding ways to purge single points of failure. Newer themes include evaluating supplier sustainability and diversity. Whether crisis or calm prevails, supply chain and sourcing professionals are being asked to rethink and manage their vendor ecosystems more strategically.
We all know there is a difference between “tactical” and “strategic” action. For many, thoughts of military frameworks or chess playing may come immediately to mind. In management terms, acting tactically means making changes within the existing paradigm to “get results.” Excellent managerial tacticians usually have very strong operating records. Outstanding tactical managers who operate in a relatively stable environment over a long period of time are often mistaken for strategic thinkers.
Strategic managers still have to “keep the trains running”, but the distinction is that they spend more time and effort on “what if” questions, including preparing for negative eventualities and scanning the horizon for opportunities. Jack Welch famously quipped that a business leader must deliver in the short run so she has enough time to figure out what to deliver in the long run. Yes, strategic leaders need to deliver on the expected, but they are also expected to prepare for changing paradigms and chase down big, valuable opportunities.
We are talking about individuals. Let’s transition to organisations. It is fair to say that the same logic should apply to an organisation, which applies to an individual. Namely, an organisation that operates “strategically” should deliver more value in the long run, but still has to deliver on operational excellence in the short run.
How to do both?
First, a distinction is necessary between the tactical and the strategic. Let us stipulate that strategic decisions are really just decisions made under more uncertainty and with higher table stakes than tactical decisions. The degree of “strategic content” in a managerial question is really just a combination of the level of uncertainty and the level of value impact, where the result is a spectrum with these two endpoints:
- high uncertainty + high value impact = strategic
- low uncertainty + low value impact = tactical
Based on this framework, making high-quality strategic decisions requires reducing uncertainty and capturing the greatest percentage of the upside if you “get it right”, while simultaneously minimising the downside if you “get it wrong.”
Information theorists have formally shown that properly interpreting inputs without error to yield the “correct answers” is largely a function of increasing access to timely and accurate information, richly contextualising the problem in relation to the information and collaborating with key stakeholders to process the information. In other words, most decision optimisation frameworks depend on reducing uncertainty and building consensus.
If this isn’t painting an interesting picture of the challenges you face in strategic supply chain management, third party risk management and vendor ecosystem optimisation through procurement, please stop reading now.
Terzo’s VRM transforms your vendor ecosystem by breaking down silos that exist between different IT tools, disparate locations and corporate functions. Terzo’s VRM creates a natural curation of data and contextualises people across functions both internally and externally across your vendor coverage. How?
Terzo is a secure, scalable, native cloud enterprise application, which includes modular capabilities in vendor catalogue management, third party risk management, people and relationship mapping, contract intelligence, collaboration, no-code workflows, governance, finance insights, AI-powered analytics, a reporting engine and a vendor 360⁰ that enables strategic thinking about each and every nook and cranny of your vendor ecosystem.
Terzo is a true next-generation CRM platform, but instead of being built for the “sellers” it has been built for the “buyers” - the professionals who manage supply chains and vendors. The people who are asked to make important strategic decisions concerning the vendor ecosystem and the people who deliver on every detail in the short run.
Terzo integrates with popular ERP, P2P, information and platform services, so you can focus on contextualising information for high impact instead of processing data searching for meaning. Terzo naturally unlocks value by connecting disparate teams, crossing functional boundaries and eliminating the physical distance between collaborators.
Terzo VRM is the tool to shift from tactical reactions to highly strategic planning and decision making within the supply chain, third party risk and procurement functions. All this, even as the VRM delivers on the details that matter in the short run. Today, more is expected. With Terzo, deliver more.
Terzo empowers enterprises to unlock strategic opportunities hidden within their vendor ecosystems. Through its Vendor Relationship Management (VRM) platform, enterprises gain insights that allow them to drive innovation, improve governance, increase collaboration and optimise performance. To learn more about Terzo, request a demo at terzocloud.com.