Monday, 30 September 2013

Procurement & Sourcing: Still Too Focused on the Primary – Cost Reduction and Savings

In a recent ISM Study, 545 businesses cited their top three priorities for 2013:
  • Improving Cost Reduction and Savings
  • Revenue Growth and Profit Improvements
  • Risk Management

Thursday, 26 September 2013

What is Spend Under Management?

Spend under management is a misunderstood term among procurement professionals. “Spend” is the easy part of the definition, but “under management” is left up to the definition of “management.”

Those starting to measure spend under management typically consider it “the spend that is actually touched by procurement (source-to-pay).” More advanced companies consider it “the spend that is covered by a sourcing plan, sourced, contracted and communicated with suppliers.”

Monday, 23 September 2013

It’s Budget Season: Do you have your list of requirements yet?

Authored by Mickey North Rizza

As we transition into autumn and back to school, for over 75% of companies it is also the time to start discussing budgets for next year. Oh, how even the word “budget” conjures up long days of negotiating to save your current budget and add more to it!

This year’s budget season is no different, however the Procurement budget is changing. Leading Procurement executives have expanded their mindset. They now want and need the right Procurement team to deliver real value contribution. Consider that “cost take out” is a way of life for business, especially to secure its margin. Every $1 Procurement saves falls straight to the bottom line while every $12-$15 in revenue that sales generates equates to essentially the same net profit for the business. Hence, Procurement’s impact to the business’ profitability is enormous.

Thursday, 19 September 2013

Gaining Five Benefits through Contract Management

Authored by Pete Hodgkinson

The discussion regarding whether or not procurement is the right fit to own contract management was certainly a lively one. Let’s push that aside, and discuss why contract management really matters, no matter who takes charge. I talk about contracts with my colleagues or clients, it’s often about managing risk. However, there are additional opportunities with contract management. For example:

Monday, 16 September 2013

To Centralize or Decentralize? That is the question...

Authored by Paras Sood

For many organizations, procurement functions undergo numerous transitions over their lifespan. Purchasing may originate reactively or tactically through stock purchasing rooms and localized buying, but as the procurement organization matures the driver swiftly becomes 'strategic sourcing' from the centre, identifying the best innovations from the supply-base, leveraging economies of scale.

Wednesday, 11 September 2013

Supplier Management: Not as Easy as it Sounds

Authored by: Mickey North Rizza

Supplier management is the art of managing suppliers to the greatest possible profitable benefit for the buyer. Sounds easy, but considering every supplier is different, what they supply is different and their interactions are different across your company, it isn’t.

Peter Kraljic introduced his portfolio management model back in the 1980s to help companies think about supplier management differently. The model is simple and focused on the products or services the company purchases. Unfortunately we make it difficult by not recognizing that suppliers supply the necessary goods and services that fit into the quadrants of the model.

Tuesday, 3 September 2013

The True Picture: Visibility through Contract Management

Authored by Soraya Sackey

According to the Aberdeen Group, ineffective control of contract management cost businesses $100 billion per year in missed savings opportunities. Disputes over who controls the contracting process, the reluctance of legal teams to move to new technology, and the different data requirements of stakeholders have made it difficult for procurement teams to effectively manage contract compliance and vendor negotiations. 

Monday, 2 September 2013

What’s Next in Sourcing Excellence? Agility’s the Word

Authored by Mickey North Rizza

There’s not a lot of debate about the value strategic sourcing plays in driving cost-savings. Best-in-class sourcing organizations, talked about in our last blog post, use strategic sourcing to drive almost 12% in year-over-year cost reductions, vs. others who average just over 3%.

Having proven it works, what’s next then for the discipline? Beyond speed, or volume, sourcing organizations will be differentiated by agility, or as defined by analyst Andrew Bartolini of Ardent Partners, sourcing quality.