Podcast | We Live to Build + Focal Point: What is procurement & why does it matter?

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foreign back to another episode of the we live
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to build podcast this is episode 132 with Anders lilovic Anders is the
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founder and CEO of focal point which helps modern Enterprises manage their
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procurement processes they recently raised a five and a half million dollar seed round in August 2022 we’re going to
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be talking about procurement because I don’t honestly understand anything about it and so this is a really interesting
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thing I always love to learn about new things so I assume this episode will be
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a little bit more on the informational educational uh uh realm and possibly
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some of his journey so I think you Enders why don’t you introduce focal
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point a little bit more and how you got the idea to get involved in it and we’ll go from there focal point was founded in
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March of 2020 so right before the pandemic started uh I have been working procurement as a practitioner for 25
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years before starting the company and the challenge that we’re looking to solve is the fact that the existing
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infrastructure providers are dealing really well with the Tactical aspects of
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procurement meaning the transactional part so storing a contract sending out a
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purchase order receiving an invoice paying suppliers and so on and most of
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the work if not all of the important work it’s done before stuff turns into a contract so Gathering your requirements
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deciding which suppliers to invite deciding which internal stickers to stakeholders to involve in a process
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that all gets done manually probably in a spreadsheet in email and pretty poorly
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and having managed large Global procurement organizations I know firsthand how difficult it is to manage
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a couple hundred people using an Excel spreadsheet and sort of the the the starting point of my journey was Excel
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is not a management tool and that was kind of the slogan that I used like it was never meant to manage a complex
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process and that’s is really what we’re trying to solve all right so what is procurement procurement in a
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nutshell is buying stuff right so any organization that you have any company
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that you have are critically reliant on third parties right so for example we’re a software company we could not exist
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but on a cloud provider so we have to select a cloud provider to be able to host our software and then we have other
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providers that underlies that so the folks that do penetration testing the people that manage our uh you know
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software distribution uh people that do AR HR systems and so on and if you think
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of a company like a hotel for example they’re critically dependent on soap being inside the hotel rooms as uh as
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new guests come right so that’s soap has to be acquired by somebody it has to be distributed to the hotels then it has to
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be delivered by a third-party cleaning service probably before it shows up in in the um hotel room and all these
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things are done by procurement and supply chain where they look at the need of the organization long term they find
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the best suppliers at the best price and then you know enter into long-term
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contracts and procurement has evolved significantly so when I started in
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procurement in 25 25 years ago it was all about saving money on long-term contracts but now it has evolved
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significantly to where we think about things like supply chain disruptions we think about supplier risk we think about
What is Procurement? (A Simple Guide)
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diversity and inclusion we think about environmental and sustainability goals that organizations have and all of these
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things are are things that procurement manages so not only do you have to pick the best provider with the with the best
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cost but also the one that’s going to take care of your data the best the one that’s going to manage your processes
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the best the folks that are uh going to be managing your environmental and
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sustainability goals and it becomes much more complicated so obviously organizations want to get things done as
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quickly as possible but at the same time they layer on all these levels of complexity and that’s really what
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procurement is today and it continues to evolve and I think we all kind of
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understand the whole idea of uh now the safety equipment that people needed for
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covet and who would have thought that you can actually shut down an assembly line because you can’t get uh masks and
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hand sanitizer so if you think about all these things that have to come into to play for example to assemble a car you
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need to make sure the steel shows up on time the paint rolls up on time the glass throws up the time the Plastics
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and all the parts and pieces all at the same time who would have thunk that you actually need you know PPE equipment to
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actually run an assembly line and I can literally shut you down so that’s a lot about procurement in
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sort of like a packed in way but as you can imagine right managing all these things in Excel in just paired processes
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becomes a challenge so beyond Excel what are some of some of their basic mistakes that companies make when setting up
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procurement processes I think procurement people try to solve for world hunger and world peace all at the
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same time and they tend to over engineer the process so that make it overly complex and and kind of grind things to
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a halt and I think that’s why sometimes procurement is not the most popular organization within uh companies
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um so I think over engineering the process and making it I think the most intellectually uh challenging process to
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sort of manage becomes a problem but also not involving the right
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stakeholders up front so a lot of times these large Global contracts that involves multiple stakeholders in
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multiple countries for example can come through a grinding halt if you haven’t involved the right stakeholders to say
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wait a minute this person in this division needs to apply on this particular requirement and then you have
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to start over again so it’s a it’s a buying stuff sounds easy
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but as you’re making decisions for the entire Enterprise you have to make sure that everybody’s bought in they’re all
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singing from the same hymn notes and they’re working in unison to make good results how can you identify who are the
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right stakeholders and how can you communicate with them and and manage all of this that’s part of what we’re
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solving here at focal point so making sure you have a structured process that is repeatable but adaptable to the what
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you’re buying so we talked a little bit about risk we talked about criticality we talked about ESG we talked about
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diversity and inclusion so you need to make sure that all of those factors are
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flexible in your process to make sure that if you’re buying something that is a commodity
The #1 Mistake That Grinds Businesses to a Halt
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that is non-critical to the organization then you take you know this path and you
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involve these stakeholders and you get these sign-offs along the way that way in a structured process there are no uh
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what I would call surprises along the way and as you then sort of think about the
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more complex buys let’s say you’re Outsourcing Human Resources processing or onboarding whatever the case may be
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right highly sensitive highly critical to the funk to the organization and if data goes waywards it’s a lot of risk
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right then you can say all right you need to make sure all of these things are done buttoned up properly and and
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that that process is followed and the mistake people sometimes do is take that commodity low criticality
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scenario and apply the the the more complex uh type or uh acquisition method
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to it and that makes it challenging right because you know procurement people are risk-averse
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just because it probably grew up sort of thing right so we try to sort of over correct and make it uh overly difficult
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to do business with us and you know you need to have a process that is flexible both up and down depending on the
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situation you’re in and having that structured process having a communication process that is off email
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and trackable globally so you can actually say yes I did involve these people um here are the sign ups here’s the
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evidence behind it that helps you be more Nimble it also helps you an audit comes around to say all right something
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went wrong how did it go wrong and and did you follow your actual your own process so in the case that something
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goes wrong what do those audits look like depends what goes wrong right so I I worked for a bank once upon a time
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and we you know before I before I joined the organization the um
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the the bank had decided that they were going to have ATMs you know cash machines uh you know they get serviced
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by equipment manufacturers but they also need to get cash delivered and this bank had the idea of we’re going to have our
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uh equipment manufacturer our equipment providers also manage our cash delivery and at some point in time four years
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into the agreement uh basically it turns out that there was a Ponzi scheme going
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on and we were out 20 point some 20 million dollars right the music stopped
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the ponza scheme couldn’t it couldn’t couldn’t keep up anymore and basically we were out 20 million dollars uh at
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that point in time you can imagine audit and Internal Affairs ascended onto the procurement organization like what went
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wrong here guys and really it involves procurement about how the organization
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got into this uh Quagmire to begin with uh what internal processes were done on
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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
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done properly right because how do you how do you how do you short 20 million bucks um so there’s a lot of processes that
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need to be sort of sorted out not just on the procurement side but also on the day-to-day side and how things are managed and I can go on and on and on
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about about these types of things right because because everybody thinks that they can buy stuff and clearly this is an example of that
The $20 Million Ponzi Scheme Caused by One Bad Vendor
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it’s like oh it makes sense the equipment manufacturer goes to the goes to the ATM they can handle cash as well
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right makes sense intuitively right but there’s a reason why there’s armored cars and why they have like play you
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know uh bulletproof glass on it because it’s worth a lot of money right and um
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so sometimes a good idea is not really a good idea once you think it through um so the audits can sometimes be fairly
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thorough depending on the risk right uh and and so on and so forth and then there are other things that go wrong so
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for example we have a again same bank we had um statements being printed uh and
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uh you print on one side and then you pass it through for another you print on one side and then you turn it over and
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print the other side uh they had a problem where uh something came out of
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order so in the one on the front side of the estatement was one person information on the back side of some other person’s information when those
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things go out they you know sort of say about what were the internal processes of the printer uh two that just should have caught this
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right clearly the operator screwed up one that when the thing jammed they should have started the batch over but they didn’t because they were in a hurry
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so like all these kinds of things become discoverable in an audit and you have to make sure you get your things right uh
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and I you know it may not sound like it’s a procurement problem but it kind of is right yeah it’s always your
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problem to to deal with I’ll give an example because it it sounds like some
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of the things I’m used to doing in the past I was involved in international trade and so I would have customers come
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to me and say and I’m you’ll laugh here but I’m serious I want a hundred containers of chicken feet frozen
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chicken feet from Brazil and so I would have to go and do due
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diligence on the manufacturers or the importers or the you know companies
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whoever it was so that I could make sure that I was coming to them with an
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absolute certainty that like these guys are legit right I I’m working on this right now
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um I had a client running a high-risk business and he wanted an additional
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payment processor to make sure that you know in case he had issues with the other ones it wouldn’t take down his
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business and so I went and I started to look for people and I came across someone and I asked them a million
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questions and then I knew you know if I was going to sign on as an affiliate for that other business and then bring this
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client to them that this client was not going to have any problems because that’s my reputation
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if this if this company either steals their money doesn’t provide the service or you know whatever happens it’s me
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that’s my name it’s you know that he’s not he can’t do anything to that business but he can make sure that I
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don’t get a new business so with that said um how should someone go about doing due
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diligence on these third-party providers to make sure they are legit what are some specifics that they should think
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about and questions they should be asking or documents things that they should be looking for and requesting and
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not you know demanding before making any decisions kind of depends on what you’re
A Masterclass in Due Diligence: How to Vet a New Supplier
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acquiring and who’s acquiring it right so there are a lot of processes that
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organizations have built now to make sure the company is stable legit and has an appropriate business process so
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for example make sure their financial stability is sound how do you do that well if they’re publicly traded you can
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pull that data down and find out yourself all right number two if they’re private get audited financials to make sure that
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they’re liquid make sure they have the capital positions that you want them to do and when we were when I worked for
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banking they kind of said look if the if the company is critical pretend the pretend as though you’re lending them a
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bunch of money right and that kind of puts a whole different lens on it so well would we underwrite this company to
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lend them money and that that kind of how he treated it and then you can sort of get into what other customer base or
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do they have customers that look like us do they have customers that are you know dominating their business meaning you
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know the worst thing and the best thing for some companies is to get Walmart as a customer because the volumes are so big right so they can really make you or
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break you and other customers can say well am I really going to compete with Walmart to get your attention right so
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again like that’s something you need to think about um if they are dealing with data make
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sure that they have a secure environment that they’re encrypting their data both in rest and at Transit uh make sure they
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have a control environment so you can request things like a sock 2 or an ISO certification uh but you know really
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make sure that they have the qualifications and the certifications that is relevant to the industry that
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they’re doing and again being a startup selling to large Enterprises we have to
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get our sock to we have to get our eyes a certification we have to do go through a variety of uh you know information
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security assessment and all these things are relevant to making sure that your
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companies that you’re that you’re doing business with really uh have the best intentions and the environments that you
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would have at the end of the day the worst thing you can think about is I’ve outsourced this now so this is no longer
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my problem and I’ve seen that so many times is companies Outsource things and then they don’t have the proper
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governance in place to manage that relationship um and you know just because it’s
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outsourced doesn’t mean you don’t have to manage it right so I think as as an industry and as a discipline we’re
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getting better and better at sort of saying okay now that we’ve outsourced this thing what are the kpis and kros
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and and the metrics that we need to monitor on a regular basis to make sure that you know the level of service is
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being kept up you said the term sock 2 and ISO certifications please explain what those are a sock 2 is a is an
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overview of your control environments anything from how you’re on board and manage your employees how you secure
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your data centers how you are how how you’re pushing code into production how you’re testing code how you’re
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monitoring uh vulnerabilities how you’re dealing with Day Zero vulnerabilities it’s basically a very long checklist of
The Real Cost of a SOC 2 Certification for a B2B Startup
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of requirements that you need to maintain and then you hire an auditing firm to come in and say you know focal
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point says they have these uh um these controls in place we have
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validated these 200 controls and we have seen evidence that they have done this over the past six months or a year and
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then here are some findings where they can make improvements and so on and so forth so that’s basically uh suck twos
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they come back and they they monitor you for a period of time to make sure that the controls that you have stated are
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actually in place an ISO certification is more like a point in time sort of thing so here are
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the standards to which um uh to which we have we are setting up sock tune ISO are very similar
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um but the saw the iso basically you get an auditing firm to come in and say yeah they’ve done it then they do a control
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assessment on top of that and so the soccer 2 is sort of like an ongoing audit to ISO is more of a point in time
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you’ve got to make sure you maintain it and ISO is more common in in Europe and Asia stock 2 is more common in the
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United States what does it cost to get these certifications there’s a lot of
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startups have come up now uh to mitigate some of those costs so basically a long
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time ago you had to pay a consulting firm to say come in and help us get sucked to
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compliant and that would normally be like multiple maybe even a couple Year
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Engagement to say all right here are all the controls you need and here’s how you document them and here’s how you put
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them in place yada yada so now you have um companies and I can put a plug in here
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for a company called drata that basically says here are all the controls you need to put in place we’re going to
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integrate your AWS or your Google environment and your you know all all
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your control points that you have that are systematic into drata and document what you have and what you don’t have
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help with the policies in place help you get background checks in place for your employees and kind of provide that as a
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turnkey service and then on top of that you have to pay an auditor to come in and validate those things so
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for us it took us about a year the service for drada is
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it’s in the low 10 000s and the audit basically depends on who you pick right
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so you could pick a tier one consulting firm and you’re going to pay tier one prices or you could pick a less well-known uh
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consulting firm and you’ll pay those kind of prices but you know a company should expect to pay 25
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000 dollars to get a sock to type two um that’s you know again like for a startup
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that’s quite a bit of money for large companies not so much right but it’s the table
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stakes in this case I was just looking at the website uh as you were talking about them and it seems like they just
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raised 200 million dollars it’s a big business right because everybody who wants to do business with Enterprises
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need those certifications right so drada can do a gdpr certification for Europe they can do ISO 27001 uh for your
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control environments and give you type two sockets like they can do uh whatever sort of standards that are put in place
How Modern Auditing Finds the Problem
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by companies they can they can do and again like I I’m not pointing out drama in particular like there’s there’s quite
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a few out there that do it um but it’s big business and this is the type of stuff procurement looks for to
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say right do you have one of these these audits can we see it what are your outstanding items and like and who did
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it like so all these things are are part of the things that companies do to make sure there’s a suppliers are legit try
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to looks like an interesting business it seems like Auditors I think being an auditor it seems like a really good
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profitable business what’s interesting though because all of it has changed so much so back you know 10 15 years ago
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you know let’s say you were auditing procurement you would pull up you know procurement does let’s say a million
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transactions a year you would pull out a hundred maybe 200 transactions and
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make sure those were done according to plan by paper documentation today everything is online so you can say all
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right here’s the two million transactions added away right and you can then put a lot of these things in
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systematic ways like Tableau or power bi and you can look for the outliers and say all right here are the things I need
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to audit not just pick a random number and all these things are becoming a lot easier and more automated right and I’m
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trying to you know denigrate the audit function I think now they can provide a
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lot more value for the virtue of having these systems in place and again this is why Excel is kind of a pain in the took
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is because it’s it doesn’t actually keep the records it doesn’t actually maintain the records as well as systematic process would say all
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right show me how something came into procurement show me we’ll touch it along the way and when and how and show me
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what happened at the end of it right and this is why you know some of these systems exist
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right what part in a company’s life cycle would procurement be become something that’s
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like important to think about typically what I’ve seen are procurement organizations can be
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relevant in some way shape form or fashion as you start managing expenses for suppliers in the 50 to 100 million
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dollar range right it becomes kind of substantial it also depends on
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the business that you’re in so for example if you’re in financial services you know these things are mandatory you
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you know at a certain point of time so if you’re dealing with customer data if you’re dealing with uh Financial
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transactions like managing your third parties become that much more important
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um I would be surprised although it happens from time to time to see companies with you know that are billion
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dollar companies they have no procurement organization right so it’s the Wild Wild West you know everybody goes out and picks their own uh and then
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at some point in time they have to come to a reckoning of trying to get cost out or they have a fraud or they have some
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sort of incident and like Twitter correct exactly right when you’re developing code right you’ll have like a
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staging environment then you’ll have a production environment it seems like Twitter didn’t have a staging environment
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so all of the code they were pushing out was automatically live
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so procurement code I mean it doesn’t matter the size of the company you’re gonna have ups anywhere in any
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company I think so basically how we develop software focal point is we have user stories we have a design and then
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we have um you know basically front-end and back-end tasks right the front on a back-end task is developed to get pushed
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into a QA environment they get tested they get tested they get tested and then
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we progress it into a staging uh to a test environment where you sort of do a demo we make sure that we do scripts and
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so on and so forth then we push it into the staging environment to see how we do regression testing end to end and then
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we push it into production assuming all the tests are happening right this is what these these types of certifications make you do
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um and you document it along the way so that no one can push code without it having been approved without having gone
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through the proper rigor make sure that you haven’t inserted any vulnerabilities in the code it’s kind of like belt and
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suspenders right but it’s it’s kind of important I’m glad you know how your company manages code
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because I’m serious I’ve talked to some people and they’re like I don’t know how this stuff works like
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you are the CEO of your company you don’t need to be technical you don’t
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need to you don’t need to know how to write code but if you don’t understand how your company operates
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sorry but I think you should like go and spend some time doing that ultimately for me having been in procurement for so
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long understanding how companies acquire software like they have a look for
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business continuity they will look for Disaster Recovery they will look for redundancy they will look for virus scan
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they’ll look for all these things so I think as a company that’s less than three years old
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uh you know we have a lot of these things in place already that large
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companies are expecting so for example if AWS goes down we have a backup clock that we we revert back to right and it’s
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just one of those things like it’s it’s it’s a waste of money because we never had to use it but sure like it’s kind of
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like Insurance you hope you never have to use it but holding smokes if it’s not there when you do then you regret it
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that’s why you charge your customers the big bucks to to make sure that it’s there hopefully someday yeah
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laughs I guess what you’re you’re burning some of the seed money to to keep that backup cloud alive you know
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the seed money that we that we raised has gone into developing these mature
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processes developing a proper sales Channel developing a marketing channel so we were heads down building product
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for the first two years right so we have a few large Enterprise customers who are early adopters and and they helped us
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shape the product Direction and helped us shape some of the features and functionalities that we have now rolled
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out and then the seed money came in on the back of that and really and now we have matured the
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processes we have gone on our sock to we have um proper marketing function with proper
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sales function and now we’re starting to scale right so I have zero uh
Inside a $5.5M Seed Round: From Product to Scaling
25:34
reservations about going up to a multi-billion dollar company and say we can take on your process and we have the
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scalability and infrastructure to do that um you know because again I’m a bit of a
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propeller head in in disguise right so I go and I monitor logs I go and I look at
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the CPU account to make sure that we never go over 25 CPU utilization like I
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know this matters to people right because no one wants to click a button and wait three seconds for something to happen right it’s kind of stupid but you
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know we’re dealing with literally millions of lines of data that we’re tracking but no one wants to wait three
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seconds and I’m on like my CTO says a few times like no one will no one cares I’m like yes they do right and we don’t
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want we don’t want that that one uh new client to break the Campbell’s back so to speak
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so we’re all over and you know that’s why seed money comes in real Handy I know we were thinking about server
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utilization and how we could tweak our own code to make things go as fast as possible and it was always a struggle
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you can’t Hardware uh bad code out right so you need to optimize your code
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um at some point in time uh you know and make sure that it runs the way it should
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um but you know you can Band-Aid it with adding server power to some extent for a period of time and the Investor’s
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opinion is always throw more money at it you’ll fix the problem not surprisingly they they they do like that but at the
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same time they expect the revenue to come in the door as well right of course I’ve I’ve seen a big change in investor
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sentiment in the last 12 months where it used to be yeah have more money
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than you need and just throw money at it and now it’s like can we not give you money and you just find a way to use the
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money you already have to like become profitable things so we raised our seed round we started in January of last year
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and by March we had term sheets from our investors and we closed a three
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million dollar round in May and then the market went uh pear-shaped and
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um basically our lead investors came in and said hey do you need some more money
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um we think your business is is you know really something we want to double down on so if you need more Capital happy to
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give you some and we basically we negotiated new terms because I said we don’t really need the capital
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but on the back of that we ended up raising another two and a half million dollars uh in the evaluation went up
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significantly also so I mean I think well I don’t think I know our investors are are very bullish they’ve been really
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a pleasure to deal with and I can’t say enough good things about him so I I
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get asked all the time if I need more Capital which is kind of a blessing in this environment I know a lot of
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investors have been uh closing up their their purse strings uh recently at least
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in in the industries I’m familiar with I’ve seen some investors who are continuing to double down I think ultimately you know they put bets on
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Founders now right to make sure that Founders that can can deliver and execute rather than just the hairy idea
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that could potentially just be something I think like you said due diligence right it has to you know people do more
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due diligence now for lower check sizes I’ve heard that B2B sales Cycles can take up to 18 months
Why Our B2B Sales Cycle With One Client Took 14 Months
28:46
what do you find is a typical length of time for you so our B2B sales Cycles are
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fluctuating it really depends on who you’re selling to um
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so we sold through a very large Hotel chain that basically dominates the Las Vegas Strip
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and our sales cycle there was 14 months it wasn’t because
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of this process it’s just the turnover in the organization was tremendous so uh
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we had to sell to three different heads of procurement so we sold to one they said yeah let’s go do this and then that
29:22
person quit uh and then we have to sell the second person and they were like yeah let’s do this and then that person
29:28
quit and the third person finally stayed and still there today that was 14 months
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and the flip side of that we we made a sale in three months they were like this is fantastic this is exactly what we need let’s go do it right and a lot of
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that comes down to the size of the company the industry they’re in um but
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as we’re scaling now we’re budgeting for a an average of six months but you know
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we can probably see that increasing significantly we’re trying to figure that out as we
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speak with that also comes this idea that you have to communicate with them right so it’s not
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like you can get a single call obviously and then they say yes that usually doesn’t happen
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so how do you build that relationship where
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they’re constantly saying well yeah let me think about it or I need to talk to this person like what does that actually
30:20
look like we qualify people in so we say hey is there a need is there
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an urgency is there a timeline is there a budget right typical band uh
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qualification and once we have qualified them in to say like there’s a real opportunity here
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then we map out the stakeholders to say all right we’re selling software to procurement but procurement while they
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might be the decision maker and the holder of the first strings we also need information security we need probably
30:50
legal we need probably um I.T we need some integration with their existing infrastructure it becomes
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a complex complex acquisition right and we need to to sing and dance
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with the other systems in the organization so for us it’s all about making sure that we understand who the
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champion is uh what the road to close is and how we can strategize about how to
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make that happen in the most expedient way uh the other thing too is is you know
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people always think that uh not always people often think that organizations can do this like I said with Excel
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spreadsheets and so on and when we meet that challenge often to say well you know we
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have service now and servicenow is a workflow tool yeah it is but it’s a I.T ticketing
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system is never meant to ingest you know billions of dollars of procurement spend and you know
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a few hundred thousand suppliers and payment terms and all these kinds of things right so it’s just if all if all
Why “One-Size-Fits-All” Software is Obsolete
31:49
you have is a hammer everything looks like a nail so we run up against that all the time too sort of saying like it’s not service now it’s not uh
31:56
monday.com or something like that so it’s an interesting sales cycle I have to tell you that I’m learning a lot as a
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seller rather than a buyer even on the Consulting side right my my company is providing consulting services and so for
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us it’s like okay well you know tell us about what you’re going through what are your issues what are your successes like
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what your customers like so we get to know them and their business and then you know find if there is a need based
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on like oh actually we could see this is a problem it’s a journey for us too sometimes because you know we sometimes
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run into organizations where they say good what do you guys do like we we help procurement be more efficient well we
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already spent a million dollars on Koopa or Ariba or whatever software
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great you have the you have the foundation in now let’s get you from you know 60 to 100
32:45
um but it’s interesting like most people might not realize what Best in Class looks like today because it’s moving so
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fast so what does Best in Class look like right now predictability of the process
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so people actually know how to get from point eight point A to point B what’s
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involved um the stages they need to go through who they need to engage and involve
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um and how long it’s going to take right I think having process transparency and then an
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easy way of actually doing it is what blasting class looks like so that process is really up to your
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organization to Define depending on the circumstances they’re in but having this one size fits all like
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you know you can have any color of the car as long as it’s black it’s kind of how procurement software has been built
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right like it’s Best in Class because this is how we built it rather than saying like what would you
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like your process to look like and and I think that’s going to be the new uh new wave of procurement software probably
33:45
software in general to be configurable to the needs of the organization rather than saying that we have developed one
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way of doing it it’s the right way because we built it uh and and uh take
33:56
it from there and uh it’s it’s a very interesting space I love that you have that mindset of it’s not about what I
34:05
built you need to use it now it’s about I’ve built something that you can use and you can use and you can use and
34:10
it’ll work in different ways based on what you need because that’s the mentality that I had with my startup which was for internal team
34:17
collaboration which was do you look at slack you look at teams they built something that worked for them and
34:23
everyone else has to use it that way but it wasn’t flexible and it was horribly uh it wasn’t scalable it was horrible at
34:31
scale um and that’s why we were trying to build a competitor to that where it was
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designed through Frameworks where you know this set of features are designed as kind of like a framework which is
34:42
basically empty in that you can use it however you want but it’ll be different for company a from Company B from
34:47
company C and that’s just how it’s designed and it’s and it has to be that way because otherwise you have companies
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like my uh former CEOs uh wife’s company that she works for a really large
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company in Malaysia and they had to spend a million dollars to adapt their operations to meet the needs of a
35:06
software that they were paying for yeah and you know this one of my pet
35:12
peeves like when I was a chief procurement officer for very large companies I would have uh you know I would have requirements to
35:19
say all right my Regulators are telling me I need to do this this this and this how does your software do that
35:25
and they would say well that’s not best practices that’s not best practices because that’s
35:31
not how we built our system that doesn’t negate my requirements right so how well how will I meet this
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requirement well my Regulators are coming and looking for this evidence if I don’t do it I’m going to be in trouble
35:42
and you know I would throw them out of my office and like like sorry you’re behind the times like
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why are you doing why are you selling to my industry like because anyone worth theirselves should be asking these questions and
35:55
if you don’t meet the requirements you’re out um so I think this is going to be a big change uh for a lot of these large
36:01
organizations yeah I think it’s going to be really important going forward I think kovitz taught us a lot about how
36:07
the way things were broken and people didn’t realize they were broken or they didn’t care that they were broken but
36:13
now they’re like oh actually they’re broken and we can see them very clearly and we need to not do that thing anymore and um so yeah I’m I’m hopeful that uh
36:21
the rest of the 2020s and Beyond will be really exciting in that regard pushing out the old and letting the new come in
36:27
and I think AI will have a big place in all of that do you guys have any AI in your processes or uh not as of yet we
36:34
are you know we’re crowdsourcing a lot of data and and what we’re looking for are
36:39
Trends and patterns that uh we can sort of say all right in in IT services or
36:47
you know you picked on slacks 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
36:54
like so they’re decreasing by X percent over time like those kinds of things like we want to be able to to map out
37:00
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
37:06
um more bit premature for that um but it’s it’s kind of neat right because once you get these large data
37:11
sets you can see like how much is a procurement organization pushing through in terms of per per uh FTE
37:19
um what is the risk they’re taking on uh what is the supplier performance on average like you get all this data and
37:24
it’s pretty cool right where you can start mining it and really provide intelligence back to companies and I
37:30
look forward to that as well you might be able to ask chat GPT for that specific data point on slack contracts
37:37
possibly possibly but then take that and you sort of like what’s the average price for
37:42
chicken or beef or shrimp you know and and sort of start mining that out because well it’s pretty cool right yeah
37:49
you could I mean I used to manually keep in touch with all of the different manufacturers of um chicken feet and
37:57
chicken thighs and chicken wings and and beef and pork and in Brazil and there
38:03
were there was in Australia Argentina and we we had to like
38:08
um tell the different customers like well if you want the best that’s like 100 hands down the Brazilian beef but
38:15
like the Argentinian chicken so you know if you wanna you know that’s why it’s
38:20
300 more per ton because like it’s the best and everybody wants it and if you want that’s what you got to pay if not
38:27
you know what are you describing right now is what in procurement terms we call a category manager so you know that
38:33
category of proteins let’s call it right and you know the inputs the outputs the prices the lead times the process to to
38:42
to slaughter and manufacture and package and ship right so um but at scale you know we have a few
38:50
hundred categories for each organization probably right and how do you how do you maintain that knowledge base so you can
38:56
hire a bunch of people that can maintain that knowledge base or you can you know get it through Ai and
39:02
machine learning and that’s probably a scale where it’s at I would much rather have a single AI that I don’t have to
39:09
pay a salary for that has infallible memory than humans that have to constantly
39:14
communicate with each other if only you know each manufacturer had an AI that
39:20
would just communicate with all of the other AIS which would then ingest the data into a central algorithm that then
39:25
could spit out for your platforms to tell any of your clients that need that specific data hey these are the updated
39:32
numbers as of five seconds ago right no humans in the loop maybe one day but you
39:37
know that’s uh Star Trek’s type stuff right so how can people follow up yeah so if you’re interested about
39:43
procurement uh or focal point in general you can reach out to us at getfocalpoint.com
39:49
or uh look me up on uh on LinkedIn Anderson thank you very much I
39:55
appreciate your time and your energy Andrews don’t forget that entrepreneurship is a marathon not a Sprint so take care of yourself every
40:01
day and if you have a need to buy a ton of stuff and it’s really complicated
40:07
check out getfocalpoint.com and if you don’t need
40:12
it hopefully you found this educational and inspirational for you I’ve I definitely did learned a lot from it and
40:18
uh yeah thank you Anders