LIVE 2005: The Morning Session

I just sat through the first sessions of LIVE 2005. Techno music ushered in a crowd of over 1200, many of whom seemed twenty years past the clubbing age.

Leading off the morning were Michael Schmitt and Bob Calderoni from Ariba. Both set the stage for the day discussing the impact of Spend Management and such initiatives as procurement outsourcing and sourcing.

Next, Bill Patrizio, SVP of Strategic Sourcing and Procurement at Disney, gave a presentation on the impact of sourcing and procurement initiatives at his firm.

Despite a somewhat corny onstage appearance of the famous mouse at the end, the presentation was packed was useful insights worth noting. Namely, Disney's sourcing efforts have made the front pages of the annual report in most recent years. According to Patrizio, the group has saved hundreds of millions of dollars a year, and currently addresses and manages over $6 billion in spend each year.

Patrizio raised a number of good points worth noting. In no particular order:

1) It's critical to earn the respect of an organization, rather than forcing a concept like Spend Management on them. And this type of respect must be earned by leadership and by example.

2) Know when to manage and lead locally -- in launching Disney's recent theme park in Hong Kong, the company relied on local procurement and sourcing managers with knowledge of the domestic knowledge. They exported standards and processes from their central organization, but relied on local knowledge and expertise to execute.

3) "Never forget about relative price" -- the value of Spend Management initiatives must always exceed their cost. Proving this concept, Disney's sourcing and procurement ROI has always exceeded 400%.

-Jason Busch

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