Spend Matters and IACCM: Making Supplier Management Tools More Effective

I recently listened to the transcript of a call that Jason spoke on in an "Ask the Expert" series presented by IACCM. Entitled Cost versus Value: are supply management tools enabling or destroying relationships?, this particular call focused on "using new visibility into supplier management and third-party data (e.g., performance, compliance, risk, etc.) to improve relationships and contracting." It also explored how suppliers can best respond to these trends and establish competitive advantage, what can be done to leverage tools and knowledge in this area, and the next wave of likely investment and developments in supply management that may result.

You can listen to the call in its entirety on the IACCM site (registration required), but here are some high-level overall points. I highly recommend listening to the whole call for all the nuances and details!

In terms of supplier management and sourcing tools themselves, Jason made some insightful points (hopefully we'd expect nothing less). First of all, he said that it's absolutely impossible to segment these tools into the category of "value enhancer" or "value destroyer" because the nature of the beast is that a tool is just a tool. One analogy he gave is that back in the Wild West, a Colt handgun was a peacekeeper in the hands of the sheriff, and a danger in the hands of the bad guy. Supplier Management tools can be used in several different ways -- a lot of businesses lean on a tool to get themselves out of a sticky situation rather than as an enabler to achieve a healthy and valuable company-wide philosophy/agreed upon outcome from the usage of the tool.

So how can you be more effective in using today's often under-utilized toolsets??

  • Do your homework, and do it FIRST. "Market intelligence is key," Jason says. "We need to get more in tune, especially on the buy side." What does this mean? Take the time to look at a macro picture that affects your organization: regional markets, commodities, labor inputs, supply risk on a multi-tier level. "We can't just manage internal information. It's crucial to analyze external data as well," according to Jason.

  • Understand the total cost structure of your suppliers better than they do to get the best out of them, both price and performance-wise. Price is only one factor in choosing a supplier.
  • Shift your attitude towards one of collaboration. Looking at strategic sourcing, you can get feedback from your suppliers at all levels (RFI, RFX, cost breaks based on operating levels, etc.). Jason posits that less than one percent of deals made today are truly collaborative in terms of true information discovery going both ways between buyers and suppliers.
  • Keep abreast of what's happening in the market when it comes to tools and technology. "The old belief is that the US was a couple years ahead of Europe and about a year ahead of the UK," Jason opines. "But when it comes to the adoption of something like electronic invoice presentment and payment (EIPP) tools, certain pockets of Europe are far ahead. For sourcing within the public sector, the UK is sometimes ahead of the US," Jason points out as well. In other words, we have to learn both with and from each other on a global scale.

The call goes on to take a very interesting turn, examining the personality type of the "typical procurement professional" and how they collaborate with the industry as a whole (which is a fascinating discussion), but these I think were the greatest general takeaways. Take some time to listen to both this call and future ones -- there are a lot more lessons to be learned. I think you'll find Tim Cummins, who hosted the call for IACCM, a masterful interviewer and commentator.

- Sheena Moore

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