Daily Archives: January 2, 2013

Scenarios for ISM/Member Organizations in 2020: Introduction and Context

Jason Busch - May 2, 2013 3:05 PM | Categories: Commentary

Three members of the Spend Matters research team just returned from the annual ISM conference in Dallas. ISM is currently in transition, with new leadership that is making significant efforts to broaden membership appeal across the supply chain, expand the role and influence of the function, and become more actively involved in new activities (e.g., giving the profession a voice in public affairs and legislative policy impacting procurement and supply chain). Whether and how ISM succeeds (or not in all) on some of the goals is a worthwhile discussion and exploration – undoubtedly one that ISM leadership and its board [...]

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Re-shoring, Near-shoring, Best-shoring: Supply Chain Strategy

Guest Post - May 2, 2013 1:35 PM | Categories: Commentary

Spend Matters would like to thank Frank Russo, CEO of Fabricating.com, for sharing his thoughts and learnings from a recent MIT Forum on Supply Chain Innovation. From the trade press to the cover of Time magazine, the focus on the state of American manufacturing is replete with stories about OEMs bringing production back from overseas. Examples from Apple and GE or Levono announcing it will make tablets in the US provide momentum to the resurgence of American Manufacturing. But is re-shoring (bolstered by recent government-led initiatives) a trend – or a bona-fide supply chain strategy? In his keynote address at [...]

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Factories in Bangladesh Improving, Air India and Boeing, Her Majesty’s Royal Kitchen

Sheena Moore - May 2, 2013 11:33 AM | Categories: Industry News

After the deadly fire at Rana Plaza, arguments for improved safety standards and working conditions outweigh abandoning manufacturing in the region altogether. Air India seeks compensation from Boeing due to losses incurred by the grounding of the Dreamliner fleet. What does it take to be head chef in the Royal Kitchen? (It sounds a lot like Downton Abby…) Uber is tossed out of NYC…again.

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Commodity Price Management at BorgWarner Part 1: The Tip of the Iceberg in Supply Analytics

Pierre Mitchell - May 2, 2013 9:26 AM | Categories: Analytics

iceberg BorgWarner gave a terrific presentation at this year’s ISM annual conference regarding Commodity Price Risk Management that I thought I’d share.  Borg Warner is a global Tier 1 automotive firm (60 locations in 19 countries) that buys 80,000 metric tons of commodities globally, including Steel, Copper, Resin, Aluminum, Powdered Metals, etc. The presentation could have just as easily been called “profit risk mitigation”.  The homegrown system (called ‘commodity engine’) they developed out of their Morse TEC division allowed them to help mitigate commodity price risk by linking commodity purchase price forecasts and resultant contracts to the final assemblies sold to [...]

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Compliance Approaches: Our Survey Results and Analysis

Jason Busch - May 2, 2013 8:16 AM | Categories: Commentary

Before Conflict Minerals (for its traceability and compliance requirements, see The Definitive Guide to Conflict Minerals Compliance for Manufacturers), REACH and RoHS supply chain compliance approaches were perhaps the best gauge for which types of programs procurement and operations teams would put into place to manage traceability. In an earlier survey on the subject, we found that only 3% of companies had put in place a system to collect, handle and validate “REACH and RoHS compliance on a product and supplier level.” In contrast, 35% of respondents relied on the non-audited sign-off of “suppliers providing agreements that they comply with [...]

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Getting More from P2P with Better Analytics and KPIs (Part 2)

Jason Busch - May 2, 2013 6:02 AM | Categories: Procurement Research

In the first installment of this series, based on the Spend Matters research paper Avoiding “Dumb Ways to Die”: eProcurement and P2P Style Adoption Scenarios to Breathe Life into Implementations, we began to explore the limitations of analytics and insight often found in today’s P2P implementations. When thinking about the type of insight that’s essential for building through better dashboards, reporting and analytics, we must consider a number of areas. This visibility could include the ability to drill down on vendor information, such as spend with specific suppliers on a PO, non-PO and invoice basis linked back to historic baselines [...]

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HICX Solutions: Supplier Management Meets Master Data (Part 2)

Thomas Kase - April 2, 2013 3:09 PM | Categories: Technology

Please click here for the first installment of this series. Supplier Onboarding as You Like It Supplier onboarding and registration isn’t always as simple as it seems. Companies can take several routes based on open and closed registration processes. In this area, we were pleased to see that HICX has adopted the open funnel approach – meaning that vendors can self-register (aka walk-in or cold-call) or be invited, and then follow the path toward providing more and more detailed information about themselves. The process has dynamic aspects (cascading questions with decision logic) and category code specific questions sets (a la [...]

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A Value-Based Approach to Sourcing Legal Services

Guest Post - April 2, 2013 1:41 PM | Categories: Commentary

Across corporations, legal services remain one of the most elusive procurement categories. This challenge is often rooted in a perception that typical procurement strategies do not apply to a category where long-term partnerships are of the utmost importance. A value-based approach with an emphasis on results as well as rates can help mitigate these concerns and gain the advocacy of corporate legal departments. Although alternative fee arrangement only accounted for less than 25% of big firms’ revenues in 2012, there is definitive transition in the direction of these agreements, particularly as law firms come under increased cost pressure in a [...]

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Spend Matters UK in Dubai, Weight-based Airfare, Shakespeare and the Free Market

Sheena Moore - April 2, 2013 11:46 AM | Categories: Industry News

Peter Smith (Spend Matters UK) and Guy Allen (owner of Real World Sourcing) are on their way to a BravoSolution Real World Sourcing event in Dubai. From Peter: “Guy is leading off with his session on Spend Analytics, then I’m going to be talking about ‘taking on a new category’ (in a category management context).  We will start by looking at whether it’s easier to take on a category that is new territory for procurement, or one that has been managed by someone else?” Pounds are dollars: Samoa Air defends their decision to charge passengers based on how much they weigh. [...]

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2013 CPOs Agenda – First Quarter Update

Pierre Mitchell - April 2, 2013 9:33 AM | Categories: Commentary

I caught up with some old colleagues of mine at The Hackett Group, who offered to let me share some of the insights from their 2013 procurement key issues study.  I am familiar with the study (because I actually developed it!), but here are some of the highlights and my reflections upon them one quarter into 2013: The overall focus for the enterprise was not just cost discipline, but agility to respond to changing global business conditions.  Just sitting in on annual stakeholder planning and budgeting sessions is not enough to stay aligned.  Proactive engagement of stakeholders to develop scenarios [...]

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Global Differences on Risk Management Priorities

Jason Busch - April 2, 2013 8:03 AM | Categories: Commentary

globe Information in this post is based on the research and findings contained in the World Economic Forum Report: An Initiative of the Risk Response Network, prepared in collaboration with Accenture. Priorities differ on a global basis when it comes to confronting supply chain risk and building resilience. According to the above-linked report, “harmonized legislative and regulatory standards” are the top priorities of respondents from North America and Europe. Contrast this with Asian organizations that “consider improved information sharing between government and business as the top priority for building supply chain resilience.” Hmm … perhaps sharing of ascorbic acid pricing among [...]

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E-Invoicing and Supplier Networks: Don’t Put the Systems Cart Before the P2P Network Horse

Jason Busch - April 2, 2013 6:05 AM | Categories: Commentary

The last – and admittedly self-serving – recommendation that Danny Thompson makes in OB10’s new e-book, Rooting Out Invoice Exceptions: The Path to Straight-Through Processing (see our recent coverage and analysis of this e-book here, here, here and here), is to “Implement P2P Automation Solutions.” Thompson notes that his analysis spent time reviewing “the various technologies that can help companies achieve straight-through processing and drive out exceptions from the P2P process” and while “ these technologies don’t eliminate the need for [process] changes … they make it a lot easier to implement and enforce them.” There’s certainly some obvious truth [...]

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What's Your Sourcing and Negotiation Brand?

Thomas Finn - January 2, 2013 12:01 PM | Categories: Commentary

Today we turn to a post from Tom Finn over on Healthcare Matters: Late last year, I interviewed Jeff Ryan of BravoSolution, a veteran of our industry and a genuine expert in the application of optimization to sourcing. Briefly, Jeff made a point in our discussion (I’m paraphrasing) that “there was no room for reverse auctions in a collaborative approach to sourcing.” And while I agree with him, it’s important to note that Jeff wasn’t saying that reverse auctions are bad or have outlived their usefulness. The point is that they do have their place; just not in supplier markets [...]

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Afternoon Coffee: CSR and Arby’s, Procurement Predictions, Fiscal Cliff Analysis, Electric Economics

Sheena Moore - January 2, 2013 10:01 AM | Categories: Industry News

Arby’s eliminates gestation crates. Arby’s to change up supply chain — Sandwich chain Arby’s announced it will take the necessary steps to eliminate gestation crates from its supply chain. The company is just one of many to recently publicly commit to more sustainable and humane procurement tactics and animal welfare. Peter’s procurement predictions for 2013. Spend Matters Procurement Predictions for 2013 (part 1) — We’ve looked in our Spend Matters crystal ball (got to be a joke in there somewhere…) and today and tomorrow we’ll feature our predictions for 2013. These are based on many, many hours of careful analysis [...]

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Revisiting OB10 – Flogging the E-Invoicing and Network Workhorse

Jason Busch - January 2, 2013 7:01 AM | Categories: Commentary

There are a few vendors in the market who tend to under-invest in marketing and know nothing about how to turn up the rhetoric for competitive and positioning banter. But these providers do often know how to quietly grow and sign deals. Yet buzz abhors an information vacuum. If the IRS got a buck for every time one of OB10′s competitors said something negative about their prospects to a customer or analyst, it would go at least some way to paying down the Federal deficit! Despite the competitive trash talking, OB10 continues to execute. Their new portal and Express Payments [...]

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New Category Management Approaches to IT Spending (Part 2)

Jason Busch - January 2, 2013 4:01 AM | Categories: Commentary

In fully leveraging IT category management strategies in a world where larger providers are increasingly integrating the capabilities of a diverse set of vendors, companies need to keep in mind Deloitte’s perspective that there are both benefits and risk to relying on a new vendor management intermediary. Specifically, according to Deloitte, “Businesses need to remember that … [this approach] has its own issues, as the benefits of a best of breed model are often outweighed by the additional vendor management overhead, increased integration risk and simply getting vendors to work together” even when a third-party is playing the role of [...]

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