Procurement’s Foundation is Data – Recorded Webinar

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Transcript

Michael Cadieux:

Hey, everybody. It’s Mike Cadieux. We’re just getting started here with Conrad Smith from Graphite. This is gonna be an amazing conversation. It’s gonna be completely unscripted today. Conrad’s got a couple of slides, but we’re gonna jump in and talk about data and his amazing passion for data and how it’s the core of procurement. I am just turning on the live stream here. So just gimme a second. I think I’ve got LinkedIn and Twitter and Facebook up at this point. As always Tina is in the control room behind us keeping an eye on us and making sure everything is going on. I’m gonna do a little bit of housekeeping, really quickly. Tina, are we live on LinkedIn by chance? 

Tina:

Yes, you are. 

Michael Cadieux:

Fantastic. Thank you so much for that. I really appreciate it. Before I go any further, Hey Conrad, thank you so much for taking your time today to be with us. The couple of pre-reads that we did on this, I loved our conversations on this. I learned so much when I talked to you. So thanks for being with us today.

Conrad Smith:

Oh, it’s my pleasure there, data  is one of my favorite conversations. I mean, we could talk about anything, but like this is the middle. This is it.

Michael Cadieux:

Cool. So in lieu of talking about procurement and data Conrad, and I will be spending the next 45 minutes discussing the inner workings of the little league world series and who we think is going to win today.

Conrad Smith:

Didn’t somebody fall off their bunk bed or something?

Michael Cadieux:

I don’t know, I don’t know, probably a kid from Massachusetts if that happened. Anyway, hello to the attendees. Let’s do a little bit of real quick housekeeping here. The chat is open and the Q&A is open. The way I typically run things is if you have a question, just throw it in the chat. I’ll try and keep an eye on it. If you are watching us live on LinkedIn or on the stream there please feel free to participate and engage with us on that as well. That is Tina’s job. She’s monitoring LinkedIn for us to see if there’s any questions that you have for Conrad or myself as we talk or even something that you want to add to the conversation, feel free to do so. You can use the Q&A module if you want at the bottom of our zoom, but typically I just jump into the chat. So let’s start really quickly. Everybody just tell me on chat, where you’re all from. So I get a bit of a feeling for where everybody’s from. I may be asking some questions while Conrad and I are talking about just the current state of everybody that’s in the room. So that said, let’s get started. So Conrad let’s start by, I don’t think everybody knows who Graphite and who Conrad Smith is. So let’s talk a little bit about yourself, your background, maybe Graphite, and a little bit about what Graphite does so that everybody who sees this and watches now or watches later gets a background.

Conrad Smith:

Sure. So how far do I go? I was born in…

Conrad Smith:

The funny thing I think is relevant in procurement–  I have a biochemistry degree. I thought I was gonna go work in operations in a pharmaceutical company and ended up in a buying job at Intel. So I’ve been doing enterprise level procurement for almost 30 years now. I, you know, when I showed up there, they were purchasing on paper, triplicate (pink, white, yellow things). And yep, that started. I was like, what? This is the highest tech, you know, Intel was like the Google of the 90s, right? It was like, this is the coolest company. And I got there and they were, the tech in procurement was like, non-existent it was paper. So that became my passion in my career. I’ve just spent really inside of Intel, and then later inside of Adobe, I was the head of procurement at Adobe, almost all of my efforts on making procurement work better inside those enterprises, and then obviously collaboration with peers and, and that ultimately led to the formation of Graphite. Graphite is really focused on improving the onboarding, kind of the holistic management of the supplier data process risk, everything you have to do with a supplier as you onboard them and then manage them through their lifecycle. And ultimately you might off board them. We never talk about it, but it’s as big of a problem as onboarding, right? 

Was it Facebook or somebody that didn’t properly off board, their, their research partner. And they had all that data a few years ago. Like, you gotta, you gotta get your data back. You gotta destroy your data, you gotta get your assets. There’s a lot of stuff we need to do at offboarding that we just don’t talk enough about.

Michael Cadieux:

Yeah. I mean, just even the basics of, Hey, we had a contract with somebody, we had a discount program that ended contractually on X date, and it’s still in the vendor system and in the sourcing system. And all of a sudden you’re like, Hey, somebody needs to go buy X, Y, and Z software again, the discounts go on, unless you’re, you gotta, you gotta keep, you gotta keep it fresh. So thank you for the background. I didn’t know that you were a biochem major and you have a degree in biochem could be the first one I’m talking to in the procurement field that

Conrad Smith:

I’m sure there’s people with us today that went to school for procurement and supply chain. I mean, that’s more and more prevalent, but I think a lot of it just kind of fell into this space and fell in love with it, and that’s what happened to me.

Michael Cadieux:

I tell people I was just a professional shopper, you know, I’m a pretty good shopper who went pro that’s all.

Conrad Smith:

When Intel hired me to be a buyer, I was like, I thought Nordstrom had buyers. Like I understood the concept of a fashion buyer, but I did not understand the concept of a buyer in an enterprise.

Michael Cadieux:

Yeah. So let’s talk about your passion for data, man. I mean, you, you start talking about data and you light up like a Christmas tree. I personally love it because I can nerd out. I’m one of those guys who says I can speak geek, but I’m not a geek. So tell me a little bit about your passion for data and, and where you think it’s, it’s the core of procurement.

Conrad Smith:

You know, one of the first things that happened at Intel when I went there is they put me in a negotiation training activity. And in the activity… I can’t remember what it was, Caris maybe?. It wasn’t the Caris class. So it was one of these negotiation training classes. And I was like, geez, I don’t know what I’m doing. Like, I gotta learn how to improve my personality. I gotta, I like my strategy. I gotta put the, you know, put my chair taller than the other guy’s chair and the lighting and all this other stuff. And you know, you may not believe this, Mike, I actually do need reading glasses these days. But I bought non-prescription lenses at the time. Cuz I thought, if I look smarter in the negotiation, I might get a better deal.  Like, how can I, how can I create this illusion that will help me to line up all of these things to get a great deal? 

And what I’ve learned in 30 years is the way you get a great deal is you have good data. Like if you don’t have good data walking into a negotiation, you’re just shooting from the hip. And the data comes in all sorts of different flavors and processes. You know, it’s different going into every negotiation you should-cost analysis, you know, the benchmarking I’m sure in the Foundry, your guys are constantly chattering with each other about, you know, who, what suppliers are giving the best deals and stuff. That data is incredibly valuable. It’s way more valuable than how tall your chair is relative to the guy across the table. Right? 

Michael Cadieux:

Yeah. Yeah. I mean, listen, I, I completely agree. I tell people all the time, you should be thinking of a sourcing opportunity. I don’t even want to call it contract negotiation anymore, because it’s just too confrontational. A sourcing event for me is something where you probably need to do, at a minimum, three or four hours of homework for every hour you’re sitting in a room talking to somebody who could be supplying you with something, right. Ideally I would say it’s six or eight, but at a minimum you gotta do three to four hours of homework. You gotta know who they are, you gotta know where they play, you gotta know a little bit about their basic information – are they public or private, how do they sell the thing, do they go through channels, what’s the typical channel opportunity, things like that.

Conrad Smith:

If you think you’re gonna get a good deal with your charisma and I’m not talking about you, Mike, because you’ve got amazing charisma. Like it just isn’t gonna happen. Like the data that you’re talking about, those hours of effort, it’s subtle pieces of data and some very specific pieces of data that you need to walk into that deal, or you’re just going to shoot from the hip. You might get lucky, you know? So to me, I mean that’s in procurement. That’s what so many of us want to do. Right? We want to bring value to the enterprise and it all comes back to that data. You kind of have to ask yourself, where’s that data coming from? You know, I think what are the really interesting parts of procurement is that we are data consumers, big time.

Like in, in all that stuff we’re talking about, we’re consuming data regularly, right? But we’re also data producers, right? The data’s coming into what we’re doing, the data’s going out, it’s cycling back into our data lake or our like, it’s really easy to get into a situation where you are creating bad data and you’re feeding it in. It’s like you’re in an echo chamber of bad data, like right. I would say most organizations have that problem. If you do it right, maybe you’re in a virtuous cycle of data. Right. You’re actually creating really good data, it’s flowing in and it’s feeding your next round of negotiations or whatever else you’re doing. Yeah.

Michael Cadieux:

I think, I think, I think what you’re talking about is what’s up here on the screen, which is, this is kind of how it used to work, right? This is the vortex that you were talking about. You bring some data in, but then you go back and reference it again and it might not be the same, right? And you’re creating bad data off of old data. So, you know, even something as important as payment, how to pay somebody or an insurance certificate or something like that, right? Is that what you mean?

Conrad Smith:

Absolutely. I mean, we are creating data and we are consuming data, and we can buy data. I mean, you know, the slide is like how things used to work. Like we all used to go back to Thomson Reuters or Dun & Bradstreet. Even in the 90s, there were data sources. I mean, they kind of showed up as a catalog on your desk sometimes, but that data floated into your process, then you created contracts– that’s data. You created purchase orders and invoices. Like all those things that are happening is creating data that you’re referencing in your process. But more often than not that transaction has a bad category code on it. Or maybe you’re working with multiple copies of the same vendor inside the vendor master file.

I mean just lots of things that are happening that have the risk of creating bad data on the way out. And, and then now that’s feeding back around in a year, you’re gonna go back and say, oh, how much did we spend with this supplier? You know, what kind of things were we buying? I mean, it’s, sometimes it’s easy if it’s a really kind of a thin engagement with a supplier, you know, exactly what’s going on, but, but that’s not always the case. And, and by the way, when you engage with that supplier, again, you just don’t want to look at that supplier’s data. Now you’re gonna say, Hey, I’m buying X, Y, Z spend category. I want to look at all of the others, the opportunity to take and consolidate the spend and leverage that spend in this amazing contract and… good luck. Like that’s freaking hard, people are paying suppliers now to just try and clean up that data because of that specific problem.

Michael Cadieux:

Yeah. I think one of the things that we’ve talked about in the past is that it’s an analog environment, right? For the most part, I mean, we’re getting to a place now where you’re starting to see systems come online, especially like Graphite and some others where it’s starting to digitize some of the process of data collection and data activity. It’s being done in a number of different ways. And we can talk about that in a minute, but historically speaking, this is an analog environment. And because it’s an analog situation where it’s coming in from multiple places, all of a sudden the procurement guy is like, Hey, I figure out this deal. And now I’m gonna hand you off to my accounts receivable and payable department so that you can put all of your vendor information into my ERP system. And I may or may not have the fields.

Certainly we don’t have the fields to track all this information again, because you know, most ERP systems have 30 fields for vendors. They don’t know whether or not you’re a diversified minority owned certificate holder or anything like that, which has created this need for this, what I call the buy-tech explosion. Right. All of a sudden there’s a lot of buy-techs on the market, including yourself and we’re trying to get there. But I think one of the things I like is, you know, you talk a little bit about the fact that we’re going from analog to scraping and things like that, but some, some of these have issues as well, right? I mean, I’m gonna, I’ll share the screen again because your team was nice enough to give me a couple of slides to show the progression of where we were versus where we are today. So I’m interested in your thoughts a little bit on how we’re moving from. I don’t know what I’ll call the agricultural age of procurement into the industrial age of procurement before we go into the digital age of procurement.

Conrad Smith:

In the 90s, I interacted with the mainframe at Intel. And so we kind of had our purchasing system in the mainframe. It wasn’t the origin, by the way of this cool graphic, my team put together was Dr. Eloise Epstein’s spider diagram. Right. When I look at that, my head just wants to explode, like she’s done such a great job pulling together the complexity of all of the buy-tech that’s out there, the things that you might tap into, but that’s not how it was 20 or 30 years ago. You’re talking, you know, you’re like, yeah, there’s just been this explosion. So before you were generating and managing data through your basic purchasing system. Now, if you think about all of the different technologies that you might be tapping into, and I haven’t met anybody and I, and I hope I never do, who’s using every single tool or product or data on the spider diagram. Like that would be absolutely mad.

But I suspect that most teams are either wanting to, or they’re tapping into two or three or five or 10 of those, you know, potentials that are in that spider diagram. And all of those have data in themselves. And they are all by nature, probably creating data consuming data. So you’re sort of taking this compounding effective complexity into the procurement world now. And you’ve gotta ask yourself, so are these integrated cycles creating a virtuous cycle of better data or are they just creating more confusion and bad data and a non-virtuous cycle, or kind of like a death spiral of bad data quality? I mean, can you really rely on everything that’s coming together there in order to make decisions, walk into negotiations, work with your business stakeholders and all that kind of stuff. Yeah. And I, and I, I don’t know about you, but I, I feel like most organizations haven’t figured that architecture out yet. I mean, that, that, that question kind of comes back to data because there’s all those systems and process and complexity and integration at a fundamental level is sort of the indexing of that data from one system back into your system in a way that makes it really easy to cross-talk and cross-walk and move back and forth.

Michael Cadieux:

Yeah. I mean, I think we’re certainly making progress, right? I mean, if you look at some of the data scraping solutions that are out there now, and things like that, some of certainly some of the databases associated with supply diversity inclusion or ESG even, or risk related solutions that are out there today, we’re certainly making progress, right? 

But at the same time, I mean, not all of this can give you the full picture of the vendor population, and we’re gonna get to your thoughts around, you know, the golden record, which I think is pretty cool. But it, it’s kind of almost an incomplete snapshot, but the people who are benefiting from deploying solutions, it still has a way to go to get the maturity as far as your full visibility and functionality. And I think what’s great is we’re gonna talk a little bit about where I think we’re going right now, but then where the future is and what kind of the nirvana state might be in the future as well. Just a couple quick things I wanted to say hello to, I got a shout out from the Lone Wolfs inside of the procurement boundary. I don’t know if you know who the Lone Wolfs are, right. But they’re group in

Conrad Smith:

Big fans, we’ve got a number that are using Graphite. So love.

Michael Cadieux:

So the Lone Wolfs are quickly becoming one of the most popular Renegade groups inside of procurement. So thanks for the shout out there. Also I see a couple of questions I’m gonna jump in and get to those in a second. One of the things I think that’s interesting is the fact that this is still kind of dysfunctional and is causing a lot of inefficiencies, right? I mean, doing spend analytics on bad data is almost impossible to do, being able to integrate new ERP systems at the drop of a hat because of all the M&A that takes place inside of our organizations is extremely difficult to do. Like you said, people are paying people just to clean their data on a regular basis. And it’s almost the reverse effect. It’s like, okay, just gimme all your data and I’ll have my single snapshot instance of it myself. And I’ll try my best to keep my instance of my vendor population clean. And what I really like about your strategy is, “Hey, listen, there needs to be a single location where these vendors can now start to feed their information into, we will be kind of the proctors of the information and then hand it off to you,” which kind of is the Graphite model, correct?

Conrad Smith:

Yeah. Yeah. Well, kind of the origin of what we’re doing, I’ve been working on this data problem for a long time. When I was at Adobe, I was meeting with the bay area procurement councils, you know, lots of tech and non-tech like heads of procurement in the bay area. And it kind of occurred to us that some of this stuff we can do together, right? Like traditionally, we manage our supplier data on an island, you know, Hey, send me the certificate of insurance and they toss it over the wall and send it to you. And now, now I have this, like, I like to think about this, the monkey on my back problem. You’ve probably heard that kind of metaphor. Like I’ve got all these monkeys on my back because all this data’s getting thrown into my environment and now it’s my job to keep track of it and, you know, make sense of it.

But my buddy in the company next door, you know, she, or he, or, you know, the other companies around me, they’re all, we’re all interacting with the same suppliers. I mean, it’s kind of silly if you think about how many of us have, you know, gone to the IRS and validated a W9 on the exact same supplier, like we’re all doing a lot of the same work. The redundancy that we’re all doing in procurement is kind of crazy. But it’s just adding to the pain here. I like so many things. And I, I think it’s true of the Foundry as well. Community is the solution to so many of the problems that are out there, but, you know, you can kind of, I won’t read through all of these pain points around the perimeter here, but these are real problems that I hear about all the time and that I’ve lived with personally. I’m sure people on the kind of on the webinar, they have these issues and problems today because everybody’s struggling with this, this isn’t a, this isn’t a new thing, by the way, this is not a, in the last 10 years, all of a sudden we have bad supplier data. We’ve had bad supplier data, as long as I’ve been in this space.

Michael Cadieux:

Yeah. I think one of the things that isn’t listed on this, although it could be, is just the cost associated with all of this, right? I mean, there’s a ton of things that are caused by this, but just the overhead and cost of attempting to do this is massive. The time waste of, okay… think about this for a second. You know, I gotta reach out, I gotta talk to my security team about what would be the answers on the security review? Yeah. I’m getting some of that in the RFP process, but maybe that’s not being stored inside of my system. Maybe the security team, you know, wrote their notes up on it and gave them a rating or something like that. I gotta go back out to that team just to get that information. I mean, you called it the modern day fax, which is the email world, right? Just the amount of data that goes through in email attachments still I’m boggled by to be completely honest with you. 

Conrad Smith:

One of these days, Mike, the IRS is gonna release their next version of the W9… I’m, I’m dreading that day. Purchasing leaders everywhere know that when that happens, we gotta hire an intern, we gotta hire a temp, we’re gonna spend a quarter chasing down updated W9s from every supplier on the planet, you know, W8/W9s, whatever they might be, just because the IRS tweaked the form, added a field, whatever they decided to do the ripple of completely wasted activity across the ecosystem is mind boggling. I don’t think you could even believe the number. I’ve never tried to model it, but all of us are asking the same suppliers for the same data over and over and over again. So that’s why I was talking about the community, right? Like yeah. Figuring out how to do this in a better way. It, it, you know, there is, there is a better way and the future’s gonna be better than the past without any doubt in my mind.

But the complexity of the data that we have to manage in procurement is going up exponentially. You mentioned like 30 fields in the vendor master table to pay somebody. That’s what I dealt with in the 90s, right? I would fax over this form, say, fax me back this form and your W9 and I’ll get you set up to pay. I mean, that was it. And we could onboard a supplier in, you know, a day or two days, and they could be paid on the next payment run. That was a normal course of business, and it sort of operated near or at the speed of business. I like to think about the speed of business. Like, what do our stakeholders expect? What do they need to be successful? All because they’re moving at faster and faster cycles from a business speed perspective.

And, you know, if you come to one of ours, you ‘ll have it. By the way, Mike, down in Vegas, we’re gonna have the F1 simulator there. So you can, you know, anyone that comes to Vegas can jump in the chair and see how fast they can get around the Montecarlo grand prix. But so that the business pulls into the proverbial pit stop, and they’re expecting procurement to respond at the speed of business, which in the 90s was okay. But now we’re layering on GDPR and conflict minerals and modern slavery. And so the layers and layers on top of these 30 fields are just expanding to the point where they’re expecting a two to three second Formula One pit stop. And they come in and say, Hey, this a I’ve been talking to this agency…  I need these guys to be in here on Monday. How do we get this contract signed? What is it? It’s Thursday today, right? This is exact, this perfect timing. I need these guys in here Monday. What do we need to do? And, and, and frankly, in the 90s, we could have made it work. And now if you break all your rules and policy, if you break them or they work around you, it can still work. But the reality is it’s gonna take a couple of weeks probably to get them through due diligence, maybe a month. And the business looks at us like, you gotta be absolutely nuts. Like there is no, there’s no way I can slow down the business by a month without them thinking that I’m crazy.

Michael Cadieux:

Right? Yeah. And the worst part of that is it’s usually the Thursday before New Year’s Eve, because it’s the end of the year and you gotta get a contract in. And it’s like, listen, man. I’ve been drinking champagne since Wednesday… I don’t know about you, but I’m clocked out. I’m just sitting here waiting for Friday at four o’clock and now you’re hitting me with a contract that needs to be signed by the end of the day on Friday. I think what’s really interesting about that is what you said, I completely agree with, which is the number of fields that we used to track for a supplier was short and sweet and easy. If it was 30, let’s call it 30. I’ll stick a number out there. Let’s say it was 30. I’m guessing now it’s 300. I’m guessing it’s at least, you know, maybe it’s 200. I don’t know what the number is now, but if you think about it, think about just the number of fields that you have associated with the average supplier relationship that you need to track now, compared to where it was. It’s at least seven to eight fold in my opinion… it’s gotta be, it’s gotta be.

Conrad Smith:

Gonna, let me blow your mind here. Okay. Okay. Now see it. I talk to companies all the time. So I can answer that question for you. The smaller the teams, like the Lone Wolfs. They’re, they’re probably dealing with the numbers you’re talking about when you get into a bigger organization you know, I’m not gonna reveal names, but you know, a really large global semiconductor company has 12 different risk domains, 12, and they’re asking a bunch of questions, right? And I came from Adobe. So I can tell you my experience there. If you were touching customer data or employee data, you’re now gonna answer north of 500-600 questions.

Michael Cadieux:

That’s incredible

Conrad Smith:

Data documents, things that are expiring. I mean, this is getting very complicated. This is no longer a two day problem. That’s why. And Mike, you know, you can go look at it. We have a white paper on our website, but one of our customers had a 90 day problem to get all the data together, to do the due diligence. And I’m not bringing this up to brag about Graphite. I’m just saying that the complexity of this data is getting so big that it’s becoming unmanageable in this old analog world that you were describing. And that’s where we’re having this collision because we’re thinking and acting in our systems that are analog. And we have this, this mountain of data, and process, and due diligence and everything else. That’s kind of coming in here as well. And it’s all really important. I mean how are our customers, how are we, and how are our customers selecting suppliers that are gonna be good, low risk, high value suppliers for us in the future?

In the past, it was a pretty difficult process in the future. You should be able to go in and type into a database. I mean, you go to Google today and say, Hey, I’m looking for a supplier that does this and the magic Google algorithm. If you trust, that’s gonna kind of put something on the top page and, and control, but you should be able to go in and create your own algorithm. You should be able to go and say, I’m looking for a woman owned business in Chicago that does iPhone app development. And I want them to be a veteran as well, and five stars of, of reputation. Like that’s how we should be able. And they have a SOC 1 and a SOC 2, like that’s how we should be able to find our suppliers.

Michael Cadieux:

Yeah. With a, with a minimum, with a minimum insurance policy of 5 million, something along that line. Right.

Conrad Smith:

That should be, that should be easy, right? Yeah,

Michael Cadieux:

Yeah. Yeah. I’m gonna jump into a couple of questions. I want to get to this golden record concept. Because I think the golden record thing is gonna answer a couple of the questions that I’m seeing. One of ’em coming in from LinkedIn. My question is, “what do you count on when you create your own data from the main data? What are the main keys to creating the most effective key data?” And I think by that, which is, Hey, what are the most important elements when you’re starting to carve through this thing? I think we’re gonna talk about that in the golden record in a second. So I don’t want to spoil your thunder. And then also I got another question that says, is there anything created to be like a sustainable data solution? And I think essentially, I mean, this is just teeing up a softball for you. The sustainable data solution for me is I think the concept of you attempting to gather and manage all this data on your own is not sustainable any longer because of the complexities associated with it. And I think at this point, you need to start thinking about holistic data aggregation that you can then pull down out of in my opinion, do you agree?

Conrad Smith:

Hundred percent. And you know, this gets into the golden record a little bit, right? I’m not quite ready to jump there, but there’s, there’s a lot of places out there that are data aggregators, data scrapers, and data sources. Those are awesome. You know, big shout outs to TealBook. I love those guys and what they’re doing as well. They’re, you know, Dun & Bradstreet is kind of getting old in the space, frankly. They’ve been around a long time. 

Michael Cadieux:

A little dusty, they’re a little dusty, I’ll give you that.

Conrad Smith:

And TealBook has taken it to a whole new level. That kind of data is awesome. But at the end of the day, we need to ask our suppliers. They need to give us, we need the data from them so that we can pay them. You can’t pay a supplier based on scrape data. I mean, that just doesn’t work. You can do a lot of other stuff with the scrape data, but at the core, you need to go to the supplier and say, Hey, I need this, this and this from you. And you could probably do a lot of the other stuff you want to do with scrape data. We have a strategy and a belief in our business that is, you know, the best way to form a 360 opinion about a supplier, and I’m talking data, is to ask them. I mean, I could go to Dun & Bradstreet and say, what’s your credit score for Graphite or procurement foundry or any of your suppliers. And they’re gonna have an opinion, but if I trust that opinion without talking to the supplier about their financial viability, I’ve really missed the boat. Like I, I need to triangulate on what the supplier says about themselves so that this kind of gets into the, the beginning and the growth of the golden record.

Michael Cadieux:

I’m throwing it up on the back screen so you can talk people through this, because I think while you’re talking, this is very important.

Conrad Smith:

Yeah. So, let me kind of dial back a little bit then. So the idea of a golden record is one source of truth. Now the question of what’s the key index field of who this supplier is. I mean, the federal government was using the Dun & Bradstreet number for a long time. They’re actually moving away from that number and coming up with their own basically supplier reference field inside the Sam database and inside every one of your own vendor master tables, you have a reference ID for that supplier. You have that, that is the index field that you need to build your entire ecosystem around that reference field because you, in your CLM that CLM darn well better have that reference number in there, right. Or, you know, any of these other sort of spider diagram companies or anything else you built, bring in.

If you can’t crosstalk that vendor ID number back into those systems, then you can’t dump all of that data into a data lake and actually aggregate and answer questions that cross those data groups. So, you know, the identity is your, by the way, when I say your identity, having a vendor number is only one thing, one part of that identity, you need to know that they are who they say they are. Right. I loved when we were talking before. Well, I’ll pause on that. We’ll come back to the blue check mark when we get to the, kind of the social side of this, but for most organizations, particularly when you’re small, the vendor record is what you have inside of your ERP or your NetSuite, your SAP, or maybe even QuickBooks, but that’s where it’s gonna be.

As you get bigger, you need to think about taking that golden record outside of your ERP which gives you some flexibility, but it also makes it easier for you to connect and expand on that data. You mentioned earlier, Mike, like the ERPs don’t have a lot. It doesn’t make it easy for you to upload the supplier diversity certificate into the ERP. Some people are doing that, but what I usually find is like, “oh, I’m a black and a woman-owned business,” and you can’t put both of those certificates into the ERP. There’s one field for the certificate. Right? So if you extract out of the ERP and you create a supplier data layer and MDM (master data management) layer there, then as your organization gets more complex through acquisition or whatever, you can feed multiple ERPs, you can feed all of your internal enterprise systems. You know, one of our customers is feeding like 97 internal systems off of their MDM system coming out of this data. Like, that’s kind of the thinking of how to aspire, how the spider diagram starts connecting together.

Michael Cadieux:

Yeah. So what I like about this is the stuff that’s in the yellow is kind of the stuff that the vendor has to give me, right? And, and I don’t want to chase that down. I want to be able to find that in one location. And then the other stuff is the stuff that I need to to know about in my company, like, okay, what, what are my payment methods for this particular vendor? Do I want to pay them on a credit card? Do I want to pay them on an ACH? Do I want to…

Conrad Smith:

You know, an interesting, interesting, all of this ends up in that vendor master table in SAP or Oracle or NetSuite, right? It’s all in there. But if you think about where’s the source of truth for this you’re right. The yellow stuff comes from the vendor. I was talking to a company yesterday that was telling me that their current process is that any employee at the company that wants to add a vendor, collects the information in the yellow bucket here, they collect that yellow bucket and they put it into a form in SAP. And I’m like, I’m ready to have a heart attack.

Michael Cadieux:

Yeah. Can you think about how many errors there are in that process?

Conrad Smith:

Well, there’s, there’s errors and there’s like the biggest fraud in our space right now is bad actors, pretending they’re a supplier putting their bank account in the middle of the process. And so almost every company out there is creating a manual process around how we avoid that bad bank account, getting mixed in when there’s a bank account change. And by the way, that’s hard enough when there’s like a handful of people that can change the vendor record. You know, if you think about 5,000 people putting data in there, now I have 5,000 points of vulnerability for a phishing attack to come in and get ahold of somebody and update a bank account. Like this just scares the crap out of me.

Michael Cadieux:

So, so I’m gonna, I’m gonna throw another slide up there, which is basically the architecture that we’ve been talking about to date, which is all of the vendors are providing you with information and it’s all going into the buyer corporation. Right. It creates delays. It creates fraud. It creates bad fingering. It creates old data. It creates lots and lots of problems, right? That’s that, that’s the model that we’re kind of living in today. And that we’re starting to hopefully get out of.

Conrad Smith:

Well, it’s worth calling out that it’s almost ubiquitous. If we think about emails and fax machines, this is pretty, obviously it’s a, it’s a one-to-one sharing of information. Yep.

Almost all of the buy-tech stuff that we’re looking at today in this space is using the same kind of architecture. I mean, the, you know, the Ariba network and your account in Ariba or any of the other portals like that, this technology was born before social networks like you and I are talking about networks. And our mental understanding of the network is completely different than it was 20 years ago. And this, these architectures were spawned out of that old thing. So almost everything that’s happening, just like this point to point data sharing. And the monkey on your back: they send you over, an insurance certificate that expires in four months… Who at your company is tracking that insurance certificate. Like, and this isn’t one insurance certificate, you know, you’ve got 500 or 5,000 suppliers and all those, you know, hundreds of fields of data, you’re trying to track and manage and keep clean. Like, it’s an unmanageable problem. You said, if you’re doing it on your own, it’s not sustainable. A hundred percent agree. It’s just not sustainable. Maybe, maybe 20 years ago it was sustainable. It’s not sustainable anymore.

Michael Cadieux:

I love the fact that you called it architecture. And that’s because when we were talking about this in the, in the run-through, you and I, the a-ha moment for me was the architectural discussion, which is okay: I used to sit back and I’m collecting information, we’re getting it, we’re distributing it back internally to our people, but I’m in catch mode, right? And I have to catch it all from each individual vendor as it comes through, whether that’s because I’m understaffed or because of the process and procedure that I have in place today or whatever. But I really like the evolution of the architecture that’s taking place right now, which I think you are kind of on the forefront of, which I’m stoked about is okay.

I just need somebody else. Like I got so many other things I gotta worry about from a procurement perspective, I need somebody else to kind of manage all the data so that I can actually spend my time engaging with the vendor. And this is important for me. I see an evolution of, and we talked about, I saw this on LinkedIn yesterday, old school procurement, which is, Hey, I’m just gonna go in a room and bludgeon somebody to where it needs to go, which is supply relationship management. I want to spend more time in supplier relationship management, but I’m so damn busy just collecting all the data and keeping it clean. I can’t evolve my process, which means I’m kind of doing a disservice to my suppliers. So I’m really interested in where this is going. I want to talk a little bit more about this.

We got a ton of questions. I don’t know if I’m gonna get to them, I apologize. I’m gonna try to. We’re supposed to be here for 45 minutes, but I think we’re gonna go an hour on this thing, just because of how many people are interested in throwing things up. One thing I do want to ask the audience, everybody that’s in an attendee right now, based on the discussion we’re having right now. How do you feel about the maturity of your vendor/supplier data from a maturity and a management perspective? And is it one like, oh my God, it’s all over the place. It’s a, we have a really good process and we keep it up to date. We’re spending way too much money on it. Two, three, I’m feeling pretty comfortable in the fact that we have this stuff. Five is I’m Yoder and I, and I’m, you know, I’m on the bleeding edge of this thing. Okay. anybody gives me a five that doesn’t have about 50 billion a year in revenue. I’m gonna call you out. So just FYI. Alright. I want to get back on the slide. 

Conrad Smith:

The bigger, by the way, the less I believe in them because they have more complex data, right? That bigger data set with more suppliers. Yeah.

Michael Cadieux:

They’re, they’re, they’re jumping in on 800 fields that they have to manage right. Somewhere in that area. alright, so let’s jump back in. I want to go from, you know, this, this data, this centralized point to, okay, now this is starting to look a little bit better for me, right? Which is, Hey, if I start to go from many to single and now I start to go from to many-to-many now it’s like, okay, now I’ve got this system of record that someone else is doing the labor of collecting those 300, 500 fields for me. And some of it is scraped data. And some of it is risk data. And some of it is market data and insurance and public versus private. And what’s my SDI and my ESG and all these other things. And now I can go to one place and kind of grab all of that, pull down what I need and potentially share that with the people who I need to share it with, right? 

Because I’ve got it looking at SOCs, I’ve got legal looking at, I don’t know something else. I got my insurance team looking at whether or not they got enough coverage on insurance. I’m looking at it from a commercial perspective. My end user’s looking at it for some other reason. My supplier diversity inclusion officer wants to know what the profile is on the vendor population that we have. So I like this many-to-many model, which is where I think you’re going and where the industry needs to go.

Conrad Smith:

Well, I mean, if you think about the core difference between this previous idea of one to many and many-to-many… Portals aren’t new, like a place for a supplier to come in and put their bank account. That’s not a new idea, right? ERPs all had these as soon as they could. As soon as the internet showed up, the ERPs were like, Hey, here’s a web form. You can come in and put your name and your address and that other stuff in here. The problem is that the form that they went to at the vendor or at their customer, the form was blank. They essentially made every portal, even if you have a hundred customers using Oracle, you show up at Oracle with a customer and you’re presented with a blank form. So you’re essentially now it’s not one Oracle portal. It’s a hundred Oracle portals and a hundred places for you to keep your data up to date.

This is so stupid. Like it in today’s world. I mean, it made sense in the 90s. But imagine Mike, if I said to you, let’s connect on LinkedIn. It’s the coolest platform ever. What you need to do is like, when we connect with each other, you tell me about yourself and you go in and do that. And then Tina connects with you and she’s like, Hey Mike, this is cool. Tell me about yourself and all that basic information, you have to type it in again. I mean, LinkedIn would die in three seconds. If that was the model, because that’s one, that’s like point to point sharing of information versus many-to-many. And we’re still primarily stuck in this “start with a blank form and type it in again” model across procurement, which we think about our problems, but this problem is our problem created because we’ve created this monster problem for the supplier, right?

It’s like, Hey, you guys all have to deal with blank forms. And what that means is they cannot manage their data for us. They need to manage this data for us in a trustable way. Once they start doing this, it pulls the monkey off of our back, and it gives it back to them. Like “this insurance certificate is your problem. When it expires, you update it, I subscribe to it and now I have what I need, but it’s your problem now, it’s not my problem.” But when they have to do that across 10,000 portals, it’s just, I mean, they know we’re being unreasonable.

Michael Cadieux:

Yeah, it’s just an unreasonable ask of the supplier base that has 1,000, 3,000, 10,000, 15,000 clients, right? I mean, reaching out to all 10,000 of your people, because not every relationship is the same, I’ll use insurance certificates right? Back in the day, I was getting insurance certificates, I wasn’t taking what was carved out of the original contract. I was looking for enhanced certificate data. So that means they have to give me customized data, doing that across a thousand clients is just almost impossible for them. So I think what’s interesting about this model of many-to-many, and I’m gonna throw it back up on the screen here, is the fact that not only is this helping us from a procurement perspective, but again, I want to go back to that concept of supplier relationship management.

We should be thinking about architectures like this, that help our organizations and our relationships with our suppliers. I want to be my supplier’s VIP client. I want my supplier to think, “oh my God, I love doing business with the company, because it’s so easy to do business with them… I put my information here, they come and collect it and boom, we’re done. I don’t have to go back in. I don’t have to have 14 conversations with the legal department, all these other departments.” So I love the idea of this golden record, all being housed in one location where I can go many-to-many and I can just go in and grab all of the vendors that I want if they’re inside of my pool and say, I just got a request from my supplier diversity and inclusion officer. They’re doing 2023 programming right now. And they want to know how much we had against supply diversity and inclusion. And it’s like, I don’t have to call all my vendors and go, Hey, what’s your certificate? Where are you assigned to? It’s kind of all there for me. So I love the idea of many-to-many.

I want to continue on. So this is bringing the organizations together, right? This is kind of where we want to get to, which is, Hey and I saw this yesterday and it really clicked for me again, the a-ha moment for me around the architecture, which is okay now I’ve got multiple organizations within the supplier community because the sales team can’t give me everything I need. They’re going back, traversing their organization. Meanwhile, I have to make all this information available to my team on my side. And there’s this golden record in the middle for me, very simple and easy. And it’s not just a golden record for one buyer. It’s a searchable ecosystem where I can say, okay, show me all my vendor population. This is the architecture of the future. Correct?

Yeah. I mean this golden record is the foundation. So to me, the data foundation below everything you’re trying to do, enables collaboration that we couldn’t do before. Now, with the golden record you’ve got your compliance and privacy. Typically what happens in this engagement is the privacy team is like, Hey, I saw this thing from the supplier, this is really stupid. They’re talking to procurement, go ask them about X, Y, Z. So now the privacy team goes to procurement, procurement goes to sales, sales goes to privacy on the other side. And they’re like, Hey, what’s the answer like, well, that’s really easy. Here’s the document like click, click, click, click, click, click. And it gets back over to the person that needs it. Right? So creating an environment where the privacy person at the buyer can talk to the privacy person at the supplier without purchasing and sales, having to be the go-between of everything really matters.

Conrad Smith:

And by the way, this happens at onboarding. This is really important at onboarding, but in year #2, when you have to do a re-screen of the supplier’s risk assessment, you don’t want purchasing to be in the middle of all of that re-screening, right? When we started thinking about this, I was so excited about the network benefits of, of doing this differently. Like in many-to-many, it really dawned on me about a year into this process, how cool the network benefits happen inside the company, because the legal team, the privacy team, the security team are all sending separate emails out to the supplier. So they have their own little bubble of data.

Here’s my privacy data about ABC supplier. You know, the IT team has the security data about ABC supplier. And meanwhile, you talked about relationship management and value management of the supplier, the person in procurement, who’s trying to really look and strategically manage that supplier doesn’t even have access to all those bubbles of data. It’s not even an onion because the onion has this image of all being kind of wrapped around the core. It’s like these layers of the onion that you have, are all scattered around the enterprise. So bringing them together in the enterprise around the golden record is super cool. And people are talking now that have never talked before, which seems really kind of ridiculous, but so many organizations, those teams that are doing supplier management in their own way, aren’t even working together.

Michael Cadieux:

So here’s something Tina’s just copied me in on something from LinkedIn and, and it’s inside of the chat for everybody to consume. One of the folks from LinkedIn made a comment for me: insurance certificates should only be required for a supplier with a profile that may impact the company like a supplier that we buy dangerous goods and things like that. My point is, and I think where this architectural discussion that you’re still requiring your supplier to give you something regardless of what the requirements are or whatever your model is for what your company’s SLA is. 

This is, this is a whole new way of thinking, which is, “Hey, I require that, but it’s already there and available for me. I just go up and grab it now.” I don’t have to call anybody, it’s all just in the golden record and all of that information is there and it’s being managed by somebody like a Graphite where, now you don’t have to go chase that down. I don’t have to send an email. I don’t have to ask my sales team to go get it for me. I don’t have to put an SLA in place.  I can take the SLA of whoever I want, and that SLA can change it on a daily basis because now I can just go up to my entire vendor pool and pull down anything I want.

I mean, that’s the concept of the golden record. Everything is now available to me in a many-to-many solution. So I can now pull down wherever I want, because I don’t have to go make 1,500 phone calls because my insurance department just changed their SLA. Like you said, the W9 concept. I lose sleep over the W9. I’m waiting for the IRS to do that. You know, just in the United States, nevermind GDPR or something.

Conrad Smith:

India changed their whole tax structure a couple of years ago and it was a monster project for every procurement professional.

Michael Cadieux:

Exactly. All right, listen, I want to, I’m gonna, I’m gonna do this. I’m gonna throw this slide up, even though it’s a little sales pitchy. I told Conrad that he was allowed one slide. So his team did a great job. I’m gonna throw this up quickly on what Graphite delivers, just so you all know, because the next slide after this, to me, sums up this entire hour of conversation. So in your opinion, Conrad, what is the big thing that Graphite delivers? I mean, everybody can read this, but if you had to pick the two big things that you think that this solution in this architecture solves, what are they?

Conrad Smith:

Well, thanks. Like, like twist my arm behind my back.

Michael Cadieux:

And by the way, by the way, I know your team is watching this. So they’re like, oh, I can’t wait to hear the answer to this question.

Conrad Smith:

So I’ll just say we go to market talking about onboarding because everyone is suffering with onboarding, right? The business is moving at that speed and they pull into the proverbial pit stop. And it’s like, what the heck? Why is this taking so long?

Everything we’ve talked about is super fundamental to getting that golden record in place. It starts at onboarding. It goes to offboarding. I don’t want to go through this whole list. I think, you know, people already kind of get the gist of what we’re talking about here is woven into everything we’re trying to do from a Graphite perspective. We care very passionately about solving this data problem and doing it in a many-to-many way and creating the infrastructure that allows us to tie together the rest of what we might be using or buying or leveraging across the spider diagram, like to get the value out of the ecosystem tools, even the ERP we need to do a better job. So we’ll point people to our website at the end, but I think we’ve got some other stuff to chat through. But that’s enough about us.

Michael Cadieux:

That. Yeah. The one thing that, again, I’m gonna go back to again, I think the number one thing that this architecture gives people is efficiency. It’s efficient in all the things that are bulleted on this bullet item. But for me, as a senior leader, inside a procurement or a Lone Wolf or somebody who’s struggling with the great talent problem that is out there today.. .For me, the one thing that this thing gives me more than anything else is efficiency of time and cost. There’s only so many hours in a week. 

Conrad Smith:

That’s enabled by trust, right? That’s the other thing I would say. We need this trusted source and network of data that we can all kind of tap into and get efficiencies by doing it together. Yeah, I absolutely agree.

Michael Cadieux:

All right. So I asked Conrad where this is all going, and this to me kind of sums up the whole thing. This was the a-ha moment for me. This was the, “oh, I get it now” moment. And he alluded to it earlier. And thank you for talking about LinkedIn and giving that example of LinkedIn. And oh, if I want to meet you, I gotta give you all my information. And then if I want to meet Tina, I gotta give Tina all my information. And then I gotta keep my information updated because Tina’s gonna have a cocktail reception. And uh-oh, my email bounced. It’s obvious to me that data aggregation and distribution is way ahead of its time on social platforms. It doesn’t surprise me that we’re there because we’re social creatures and this is what we do. But at the same time, it hasn’t jumped the fence yet into corporate management and more particularly in supply chain and in procurement related activities.

Conrad Smith:

Well, we’re punching a big hole in the fence at Graphite, but yeah. If you just stop any of us on the line right now, Mike, me, you and anybody else that sat in a room and said, how are we gonna solve the problem that we just talked about? We would evolve to using the building blocks of data-sharing that have, have matured as, as much as you want to call it that on the social side. And we would do that here because there is no better example of frictionless sharing of information than what we see in our personal lives. It’s beyond ridiculous how fast and frankly, stupid fast, and sometimes stupid data is flowing around on the personal side.

There is virtually no friction. I mean, that’s why GDPR exists because of this mess on the left. But then on the, you know, on the business side, incredible amount of friction. It is not easy to collect and gather and manage the information, everything we’ve talked about today, but truly like using the architecture of a social network in the business environment. I am beyond convinced, and I’m obviously hopeful Graphite wins in this effort, but the future in procurement, the future of supplier data management has to get to this place. There are millions and millions, probably tens of millions of wasted hours in the global economy on managing the dumbest most benign things that would be automated immediately with a social architecture in the business space like this.

Michael Cadieux:

Yeah. I mean, and think about you know, listen, I’m connected to 20-something thousand people. And it follows, I would have to tell 20,000 people that I went to Marist college between 1988 and 2004.

Conrad Smith:

That’s how purchasing works today.

Michael Cadieux:

And I’m sorry. I didn’t go to school for 20 years. I, I apologize. It was from 1988 to 1992. I apologize. Unless somebody from Marist just heard from the person’s office, I’m happy to talk to you .What I, what I really like about this though, is these little green boxes that we haven’t talked about yet. And this was something that we threw out yesterday in a prelim discussion. The thing that I like about this is, “Hey, I’m on Twitter and I’m getting all this informational feed because of the highly networked architecture of Twitter. But I’m not really sure about the data.” There’s 700 different Beyonce accounts out there on Twitter right now, the fact that Twitter went out and put a little check box next to Beyonce. So I know that that is a verified account and that that information is coming from Queen B, or from whoever I don’t pick your choice. I can’t believe I just said Queen B in a webinar. But, the fact that you are getting I’m sorry, I’m sorry. I think I read an article about it like a day ago, but if we could get to the side of the equation on the other side of this form, imagine if we have verified collaborative data… The entire, essentially what you’re saying is in the new model, everything is verified and it’s all collected for us and we just pull it down. Right?

Conrad Smith:

Yep.

Michael Cadieux:

Okay. yeah, I mean, that to me, I don’t know about the rest of the group that’s sitting here and watching this, that to me was the a-ha moment when I was like, ah, this is an architectural discussion. And the architectural discussion that we can pull down from the social networks that have already taken us to this place of this many-to-many information distribution model opens up the efficiencies associated with vendor onboarding, offboarding, and data collection and distribution in, in a massive way. So listen, we’re out of time. We tried to keep it to 45 minutes, but I knew we wouldn’t be able to. Let me ask you this. I got one more slide I can throw up about how to find out more. Because I know you just did a white paper and you just put the white paper up there. So people can go jumping in and pull down your white paper. Let me, I’ll, I’ll show that while I’m asking you this question… We just talked for 60 minutes about data, the golden record, the architecture of many-to-many and data management. If there’s one thing people need to take away from today, what is it for you?

Conrad Smith:

We’ll talk a little bit more about this in Vegas I think, Mike, it’ll be kind of the theme of our conversation there. This sounds like a big, hairy monster mess to most people, to me even. Like, okay, this is Mount Everest. How do I go attack this thing? And that, and that’s kind of scary and daunting and, and most people are looking and by the way, most procurement people don’t have access to enough IT resources. So it’s like, I don’t even know where to start. I don’t know what to do. This is overwhelming, by the way, this white paper will kind of give you a step by step of what, what, what my team and I did at Adobe in a very agile, incremental way. Like you don’t have to eat the entire onion tomorrow, that’s not the answer here. 

Just start simple. Go back to your core, start simple and make a 1% improvement every week. Don’t get overwhelmed. Innovation isn’t like revolution. Where you need to go here is just 1%. And maybe that’s 1% data quality improvement. I don’t think so. It’s just kind of like, what’s that next thing that, you know, you need to do? Do it. Take that little bite and move forward. If you make 1% improvement every week, that’s like 50%. That’s a giant magnitude improvement over the year, And you’d never go like, oh, I’m gonna do this 50% thing this week, but you can definitely find 1%. Go tackle the 1% this week. And by the end of the year, you’ll look back and see, geez, this is the best year I’ve ever had. This has been amazing.

Michael Cadieux:

Yeah. I get two things. I don’t think I can narrow it down to one thing. I’m gonna say two things. One is I love the idea of taking the architecture of social networking that we’ve done in our own personal lives. And now applying that to business, which is many-to-many and allowing the supplier population to be able to provide us with the content, which is then verified right. And then I can go collect that and I can give that to multiple people inside of my organization so they can go without having to ask me all day long. I know you’ve got a couple examples that we don’t have time for, of time-sharing associated with the sales team that can actually go and find information about this now on the sales side of the equation. And then the other thing I think is just the fact of how much efficiency this potentially creates inside of even somewhat simplified procurement organizations, nevermind the multinational 350 people. It’s absolutely amazing, in my opinion, how much efficiency can be gained in this new model. I’m really excited for the future of where this is going.

Conrad Smith:

Can I add just one thing there?

Michael Cadieux:

Yeah, yeah.

Conrad Smith:

Big efficiency, but the credibility that we’re losing in procurement these days, because we can’t do this quickly and they know we’re not looking at the speed of business. So this is a data problem and it’s an efficiency problem, but it is impacting our customers’ (our internal stakeholders) willingness to call us and involve us early. And we all know that that’s where we’re gonna get the 10 or 20% negotiated savings. And if they don’t call us early, like what are we doing? So that credibility by doing this right, is off the charts in terms of value.

Michael Cadieux:

I completely agree.

Thank you very much. I appreciate it. I think we could do two hours on this, but I can’t believe we just banged it out for an hour. Couple of things about Conrad and the team over at Graphite, just so you know, Conrad and team are community sponsors of Procurement Foundry. So thank you very much for that, Conrad. You’ve been to a number of our virtual conferences and they will be in person in Las Vegas with us at our first procurement Foundry physical member event on November 2nd and 3rd. By the way, if you don’t have your tickets yet, they’re going we’re about 60, 70 days out? I think we have less than a hundred tickets left and I think almost half of those are already spoken for, people just haven’t gone and registered. So we’re getting low. There is a cap on Las Vegas folks, just so that, you know. Conrad, can’t wait to see you there. Thank you very much for the team. If you get a chance to actually go back, I’m gonna flash it up one more time in case somebody wants to see it. Go out and check out this white paper. I really appreciate your participation in your partnership at Procurement Foundry. Obviously folks like you help us to provide all the value that we do to our membership. So thank you very much.

Conrad Smith:

My pleasure. Thanks Mike.