Earlier this year, my colleague, Peter Smith, penned a very thoughtful paper exploring the age-old concept of centralization and decentralization with a modern twist and set of observations and recommendations: Centralise or Devolve Procurement? Why not Both? How Technology is Enabling New Operating Models. In the coming weeks on Spend Matters, we’ll take a look at some of the highlights and observations that Peter makes in his work, starting first today with what he aims to achieve with his effort. We’ll also include additional observations and commentary as we explore some of the elements of his analysis in detail.
Search Results for: Procurement
Small and medium sized businesses (SMBs) could potentially have the most to gain from better procurement, yet they tend to lag far behind larger organizations in general sophistication (e.g., adopting basic strategic sourcing, category management, or compliance processes and policies) as well as technology adoption across source-to-pay (S2P) procurement technology. While inconsistency of process knowledge and excellence in SMB procurement is an important broader topic for discussion – for example, why many smaller businesses may be quite good at buying one or two strategic commodities such as stainless steel, copper, resin or contingent labor but sacrifice tremendous value overall – […]
In this second installment, we will discuss the value of breaking the analytics technology stack into different building blocks so that procurement and IT can be better satisfied in their individual goals. Although spend analysis is not even 10% of the overall supply analytics footprint, it is a good illustration of this concept. Here’s my ‘dummies guide to procurement analytics architecture’ in three layers.
At Sourcing Interest Group’s Spring Summit, Welsh, Carson, Anderson & Stowe’s (WCAS) Jeff Gallant gave a fact-packed, fast-paced hour-long introduction to the world of private equity and procurement in a talk titled Procurement as critical resource: creating value through private equity portfolio management. I came away from the presentation with a strong appreciation for the opportunities of a relatively new position that is emerging for former CPOs and procurement leaders: serving as operating partners within the private equity world. However, the lessons that Jeff shared are not just relevant to those transitioning into the world of leveraged buyouts – they are applicable to all of us that serve as service providers to our businesses.
We'll be keeping up with our sourcing and procurement coverage on our main sites throughout much of this week and the following. Even though we'll have a somewhat reduced schedule relative to our regular content onslaught, do check back for daily updates, analysis and news. Behind the scenes over the next few weeks, Spend Matters will undergo the biggest transformation it has seen in over eight years since we started to publish. We have some big news to report in the New Year as well. Here's a quick synopsis of what's to come: During the second week of January, we'll […]
Continuing with our analysis of private equity and procurement based on Jeff Gallant’s observations at the SIG event, one underplayed aspect of the network or portfolio effect of driving procurement and operational savings is the, well, network itself! Jeff suggests that the value of the “social network” – i.e., getting different portfolio company procurement leaders together – can be significant.
Our next Ask the Expert webinar for Spend Matters Plus/PRO members is this Thursday, July 25, from 10-10:30am Central and features Pierre Mitchell on the Top Ten Benchmarks in Procurement. What's the good, bad, and ugly around procurement benchmarking? What metrics should you consider, and what are the pros and cons of each? If you can only pick 1-2 benchmarks to consider, what should they be? What are the top industry trends? Spend Matters PRO/Plus members, click on through to register.
Social news, media and collaboration are all around us within the procurement, finance and operations worlds. On LinkedIn, popular procurement related groups have thousands, sometimes tens of thousands, members. While size is not necessarily a gauge of value – just as savings or PPV is not necessarily the most important KPI in measuring procurement performance – it amazes us that the group Ariba started on LinkedIn, Sourcing and Procurement has 58,523 members. Niche social networks aimed at procurement, such as mysourcingteam.com, a beta site originally created to encourage ways of fostering category-level collaboration between organizations, have also emerged.
Continuing on with our analysis of the impact of social collaboration and information tools on procurement applications, we come to the impact of individuals and profiles in the application community itself. The idea of extending the master data we keep within procurement beyond what we’ve historically thought of is probably the most important step toward fully taking advantage of social collaboration.
Like so many things in life, the simplest advice is to follow the money. Ultimately, procurement-related fraud is about getting money from the organisation without proper justification. The procurement aspect of our analysis means we’re interested in cases where there is some link with third-party supply of goods or services, although as we saw in part one, it does not actually have to involve a third party at all.
I’ve been enjoying the cold weather in Chicago for a few days, attending strategy meetings at Spend Matters HQ. Today I am at the annual Procurement Leaders Forum, held at the Palmer House Hilton. In the UK, the event has been around for 9 years, and they continue to grow their reputation and brand here in the US as well. The main part of the event took place today, with a decent turnout in attendees. What’s most notable is the senior crowd – chiefly with senior procurement role team members (CPO, VP, etc.) from companies across all verticals: practitioner speakers […]
Oracle’s platform is as multi-faceted as SAP’s – you can get their Oracle E-Business Suite Advanced Procurement Solutions (EBS) of procurement solutions via traditional delivery (onpremise on R12.1) or the exact same procurement experience in an Oracle On Demand version (delivered virtually by e-three), or you can choose the Oracle Fusion Applications (Oracle’s purpose-built next-gen On Demand procurement version) suite or even (nominally) step away from the Oracle label and go over to Oracle PeopleSoft and get your procurement solution fix there.
Over the past eighteen months, we’ve had the chance to look at Oracle Fusion Procurement on multiple occasions, including briefings and demonstrations at Open World in 2010 and 2011. Since launching Oracle Fusion Applications, Oracle has been relatively quiet as it focuses on delivering and implementing Oracle Fusion Applications successfully with select customers, rather than emphasizing a large-scale marketing push. Oracle Fusion Procurement represents a big leap forward for Oracle not so much in functional capability (at least not yet) relative to Oracle E-Business Suite, but rather in integrated capabilities and design philosophy. In its current GA release, Oracle Fusion Procurement includes the following modules: Oracle Fusion Purchasing, Oracle Fusion Self-Service Procurement, Oracle Fusion Sourcing, Oracle Fusion Procurement Contracts, Oracle Fusion Supplier Portal and Oracle Fusion Procurement and Spend Analytics.
In our previous series on procurement services provision and information architectures (here,here, here, here, here, here and here) we discussed the importance of thoughtfully designing various architecture elements such as MDM, analytics, workflow, portal infrastructure, etc. to re-frame overall information capabilities beyond the traditional provider-led “module-menu” approach.
I wonder whether we’re beginning to see a fundamental change in society and business that will affect the drivers for procurement as well, and perhaps lead us into another era for the function? Slower economic growth in the developed world; competition in the West from BRIC and other fast developing countries; growing issues around raw material and resource shortages, from water to raw minerals, food to oil; all these may lead to organisations and government changing their priorities somewhat.
The biggest predictor of success of procurement organizations’ ability to make the best technology/business trade-offs and ‘pick the right tool for the job’ is having someone within IT and within procurement who is specifically tasked with an architect role to ensure that procurement is able to attain the elusive ‘long-term quick-fix’ solution. If nobody is the designated driver, then decisions are, at best, sub-optimal. Having effective IT/procurement governance goes beyond this discussion, but it is a key success factor. For example, IT may have some budget (and sunk costs and unused licenses) that procurement may be able to access, and there might be a broader IT initiative that procurement can use to latch onto for its own purposes.
Procurement has very little in the way of scientifically proven best practice, and not really very much even in terms of academic underpinning to what we do day-to-day. That is in part because many key procurement activities appear highly subjective and are linked to behavioural skills and issues, which are harder to analyse and study than fact-based actions. Such “soft” activities include negotiation, relationship management, and even arguably risk management.
The first installment of this series (and subsequent topical coverage), exploring the evolution of private equity and procurement, is based on a presentation given by WCAS’s Jeff Gallant at Sourcing Interests Group’s Spring 2013 Summit. Today's installment focuses on how to drive savings and EBITDA.
In general, African procurement organizations would do well to become more quantitative and analytical in their orientation toward spend and supplier data. As with a lack of more advanced sourcing approaches reliant on increasing sources of data, companies area also somewhat blind when it comes to basic spend visibility. I noticed the absence of a baseline spend understanding during the early parts of the conference, and it was obvious during my own presentation that spend analysis in the general sourcing sense is a fresh subject in the region. It’s like the early 2000s all over again – an opportunity for expat practitioners to perform “miracles” at your Kenyan subsidiaries, as well as for solution providers to deliver great savings. There must be exceptions (nobody was there from Coca-Cola for example) but by and large this felt like a Greenfield opportunity.
Lesson 8 is "Whoever has the best hand wins." While this adage pertains most literally to poker, the procurement lesson is really about finding the best resources (e.g., internal vs. external) to execute procurement processes, whether they are "steady-state" or transformational. Processes might be executed by salaried staff, contingent labor, BPO firms and/or suppliers themselves. There is even a rise of a category we have begun to cover on Spend Matters called “procurement managed services,” which falls somewhere in between consultancy, skilled contingency and BPO work.