Author Archives: Peter Smith



CPOs Owning Accounts Payable: Does Supply Chain Finance Make it Interesting at Last?

Historically, most CPOs and procurement leaders have not taken a huge amount of interest in the final stage of the end-to-end purchase-to-pay process. The mysterious land of accounts payable (AP) has been out of bounds to many of us in the profession. But that was, if we’re being honest, how we liked it. In my 10 years as a CPO in three organizations, I never had any desire to expend my empire in that direction. It didn’t look like a “mysterious” place in a good way; it was full of people doing what looked like pretty dull administrative tasks for a start — not what we wanted to be as we tried to build our procurement functions into strategic, business-focused powerhouses. So in the vast majority of organizations, procurement has been happy to let AP stay under the auspices of finance.

Offsets, Local Content and Supplier Information Management (Part 2)

We wrote in Part 1 about offsets in the defence industry, and the commonality they have with wider issues around “local content” — using procurement and supply chain activities to show support for building capability and capacity in local economies and supply chains, often as a lever to win contracts, concessions (e.g., mining) or similar.

So bringing this back to practical considerations, what can we learn, and how can organisations position themselves successfully in this field? That’s important because the need for organisations to show how they are impacting and benefitting local, regional or national economies is only going to increase in our view. That’s particularly true for firms who wish to trade and work internationally, particularly in the developing world. And looking at the growth rates in Africa, South America and the emerging parts of Asia, these are markets in which more and more Western firms will want to operate.

Offsets, Local Content, and Supplier Information Management

suppliers

The principle of offsets is this: assume a country doesn’t have its own indigenous capacity or capability to manufacture, say, fighter aircraft, so they obviously have to buy from foreign suppliers. But the government making the purchase will (not unreasonably) wish some of that purchase price to be re-invested back into their country.

Six Best Practices for Procuring Marketing Services (Part 2)

marketing

Editor's note: This Spend Matters Plus brief is a refresh of our 2013 series on marketing services, which originally ran on Spend Matters PRO. 

In Part 1, we pulled together a number of key learnings (and some personal experience) to come up with six best practice suggestions for CPOs or marketing services procurement leads to consider. We previously looked at three recommendations around category strategy and suppler management. Today we’ll take a look at three more that focus more on the procurement function and individuals in it, how they align with marketing colleagues, and the skills they need to succeed in this area.

Six Best Practices for Procuring Marketing Services

marketing spend

Editor's note: This Spend Matters Plus brief is a refresh of our 2013 series on category management, which originally ran on Spend Matters PRO. 

My personal involvement with procurement functions trying to get to grips with the marketing spend category goes back some 25 years, and I had some successes and failures in my time as a CPO in several large organisations. It’s a category where procurement has been slow to increase influence, but according to figures from the World Federation of Advertisers, we have gradually reached a position where the procurement function is estimated to have between 50%–80% spend coverage in the category (depending on the geographic maturity, with firms in Europe at the top of the scale and South America at the bottom).

This is starting to feel like a coming of age for marketing services procurement, with some very impressive people in senior category roles speaking and a general air that clear best practice is emerging. There are still tensions between procurement and marketing staff in some organisations, but relationships seem to be improving and a sense of where and how procurement can contribute is certainly developing.

In this Spend Matters Plus article, we’ve pulled together some key learnings to come up with six best practice suggestions for CPOs or marketing services procurement leads to consider. We’ll have three around strategic category and sourcing issues today, and three focusing more on engagement strategy and people in Part 2.

A Critical Look at Category Management (Part 4)

Editor's note: This Spend Matters Plus brief is a refresh of our 2013 series on category management, which originally ran on Spend Matters PRO. 

In the last few weeks we’ve looked at some of the drawbacks related to what we might call “traditional” category management (Part 1, Part 2, Part 3). However, we should stress that they’re all aspects of the process that can be overcome by appropriate thought and management effort. The lack of stakeholder involvement we’ve sometimes seen — the overly procurement-centric approach — can be addressed by ensuring that the right engagement takes place. The risk of over-standardisation of approach can be mitigated by being aware of that issue and ensuring it doesn’t happen. But today’s discussion will consider an alternative approach that perhaps challenges more fundamentally the conventional steps in the category management process.

A Critical Look at Category Management (Part 3)

We wrote in the last article about the standardised nature of category management process and practice, and the dangers inherent in approaching different categories via that standard approach. Now let’s consider another failing of much “traditional” category management methodology and philosophy. We might define this as an overly procurement-centric approach to the whole task in hand. The buyer is placed in an almost deity-like position, controlling the whole process and with other participants fitting into their scheme and doing what they are told to by the all powerful category manager.

A Critical Look at Category Management (Part 2)

category management

Editor's note: This Spend Matters Plus brief is a refresh of our 2013 series on category management, which originally ran on Spend Matters PRO. 

As we wrote in Part 1 of this series, category management (“CatMan”) has been perhaps the most powerful sourcing tool in the procurement armoury for some years. But 20 years on from the beginnings of its widespread adoption in the general procurement world (it has earlier origins in retail), we think it s a good time to review the state of CatMan and ask some fundamental questions. Is it still relevant? Has it outlived its usefulness? Does it need radical updating? Or is it still fit for purpose?

A Critical Look at Category Management

category management

Editor's note: This Spend Matters Plus brief is a refresh of our 2013 series on category management, which originally ran on Spend Matters PRO. 

CatMan’s main impact was in the indirect spending area. Procurement in a manufacturing environment was run on what we might call a category management basis for many years, even if we didn’t call it that, probably since the beginnings of the function. I was the “Raw Materials (EU controlled materials)” buyer for Mars in my first functional role, then Head of Packaging Buying. We would now see those as first a fairly junior then a more senior CatMan role, but that was well before the days of consultants such as Kearney and McKinsey popularising the approach and the associated terminology.

The Game of Professional Services: Procurement vs. Providers

Editor's note: This Spend Matters Plus brief is a refresh of our 2012 series on buying professional services, which originally ran on Spend Matters PRO. 

Procurement executives are often their own worst enemy in this context. Too often they measure their success purely on some hourly or daily rates achieved from the professional services provider. So the negotiating goal becomes a simple one. Your list price for a lawyer with around three years post-qualification experience is $300 an hour – we want a rate of $200 an hour. Or last year we paid £2000 a day for a managing consultant — how much discount will you give me this year?

Koble’s Experian Partnership Turns Social Supplier Discovery into Risk Management Opportunity

SpendLead

We’ve covered Koble here over the last year or two, and the platform continues to grow its user base of buyers looking to find innovative suppliers and suppliers looking to find buyers (around 500 major firms are now using the solution.) Recent accolades have come with a place in the 2017 Red Herring North America “Top 100 winners,” which lists innovative and exciting tech firms, and even a nod by Gartner. Part of the latest reason why is a free risk analysis tool built into the platform.

Improve Your Category Management Performance: Report and Webinar From Future Purchasing and Spend Matters

category management

The Future Purchasing Category Management survey and report is now in its third edition, and has established itself as the definitive piece of research work in its field. Future Purchasing, as a consulting firm specializing in “CatMan,” bring its own insights to the results. That means the final report is far from just being a presentation of the data from the several hundred survey respondents, representing organizations from many different sectors and countries.