I'm not sure exactly when, but around a few years ago, terminology began to appear in the procurement technology provider community that labeled transactional purchase-to-pay (P2P) processes as “downstream” – meaning post-contract processes – and strategic sourcing processes as “upstream.” It has become a convenient shorthand naming convention – and also seemingly harmless. But, recently, I saw a provider trying to create some thought leadership about upstream value creation and downstream value capture and decided it was time to say something. Or a few things…
Category Archives: Category Management
If you’re sourcing commodities this year, then don’t go any further before reading our 3 Best Practices for Buying Commodities in 2015. Jason Busch, founder and managing director, Spend Matters, and Lisa Reisman, CEO, Azul Partners, and executive editor, MetalMiner™, teamed up for this must-have FREE PDF for purchasing professionals everywhere. With it, you will: Learn why sourcing on the spot market is inherently speculative and therefore risky; know why using indexes is just plain bad strategy; and wring every possible bit of value from your direct material commodity spend. So stop speculating and learn concrete, tangible practices that will yield strong ROI, in addition to the most favorable outcome possible. Get your copy today!
Policy Meets Procurement and Category Management: Analysis and Implications of the Supreme Court Striking Down EPA Regulations
In a late June ruling, the US Supreme Court struck down Environmental Protection Agency directed regulations for limiting mercury and toxic emissions from coal and oil power plants. From a procurement and supply chain vantage point, the ruling is arguably the most important decision the nation’s highest court has made in the past decade. Not only does it cut to the very heart of procurement’s mission to manage costs, but it has direct linkages with energy sourcing and category management. The decision also highlights the need for procurement to work more closely with public affairs and public policy teams inside their organizations. This Spend Matters PRO brief analyzes the implications of the ruling for procurement and supply chain organizations and provides recommendations for manufacturers and non-manufacturers alike on how to take action around policy and regulations.
Spend Matters welcomes this guest article by Mark Dell’Olio, a manager in the KPMG Operations Advisory Practice. The role procurement plays in the broader business context has changed significantly in the past decade as cost-effectiveness, supply assurance and social responsibility place a greater emphasis on strategic spending. As a result, today’s chief purchasing officer is far more likely to be taking an elevator to the C-suite, rather than be roaming the halls of the back office. The 2014 CAPS study entitled “Chief Purchasing Officers' Mobility and Compensation: A 2014 Study of Fortune 500 Firms” reported that 82% of CPOs have direct access to their CEO, this is compared to 60% in 1999. These statistics confirm procurement’s increasing importance to delivering sustainable stakeholder value.
This third and final installment of an exclusive preview of a forthcoming research series sponsored by BravoSolution that we created for our Spend Matters PRO subscribers. Consider it the “chef’s choice” tasting bite that the chef (that would be me) sends out in advance of the full multi-course experience. We hope you enjoyed it. Please contact me if you have any questions on the topic – and be on the lookout for the full version of the pending series. In Part 1 of this 3-part Spend Matters PRO series, we introduced Category Management 2.0 as “The lifecycle management of spend/supply categories that meaningfully impact enterprise performance” and why it’s superior to category sourcing processes locked inside of an n-step sourcing process. In Part 2, we also began discussing some approaches to take your category management processes to the next level. In this installment, we’ll continue the discussion and wrap up with a few closing thoughts.
As Pierre Mitchell, chief research officer, wrote in Part 1 of his Spend Matters PRO series on the subject, category management 2.0 is "the lifecycle management of spend/supply categories that meaningfully impact enterprise performance." Earlier today, we published Part 2 of this series: How Technology Helps Take Category Management to the Next Level – Category Management 2.0 (Part 2). As the title suggests, Pierre takes us through some approaches to elevate and improve your category management processes. How does a procurement professional do this? Pierre offers some suggestions such as using market informed sourcing and "micro" segmenting your spend into logical categories.
This second part of a 3-part series is an exclusive preview of a forthcoming research series sponsored by BravoSolution that we created for our Spend Matters PRO subscribers. Consider it the “chef’s choice” tasting bite that the chef (that would be me) sends out in advance of the full multi-course experience. We hope you enjoy it. In Part 1 of this 3-part Spend Matters PRO series, we introduced category management 2.0 as “the lifecycle management of spend/supply categories that meaningfully impact enterprise performance” and began discussing approaches to take your category management processes to the next level. In this installment, we’ll continue the discussion and introduce some approaches to make this happen.
This is Part 1 of a 3-part series is an exclusive preview of a forthcoming research series sponsored by BravoSolution that we created for our Spend Matters PRO subscribers. Consider it the “chef’s choice” tasting bite that the chef (that’d be me) sends out in advance of the full multi-course experience. I’d like to thank BravoSolution for giving me free reign to really explore this topic in the detail it really deserves (and also a shout out to my peers who helped in developing it). OK, let’s get on with it… Procurement organizations, like the stakeholders they serve, are continually tasked to do more with less. They need to reduce complexity and squeeze out costs, both internally and within the supply base, and also address broader issues such as innovation, customer engagement, risk management, globalization, sustainability and various industry-specific mandates. Unfortunately, procurement’s toolbox isn't always full of the tools needed to get these other jobs done. In this Spend Matters PRO series, we’ll address how to free category management from the shackles of strategic sourcing to unlock broader procurement value creation. It’s more than the usual “yada, yada, yada,” and we hope that PRO members gain value out of this series.
We kicked off this series on global process ownership (GPO) last month over on our Chief Procurement Officer website. The first parts of this series discussed the concept of global process ownership and its relevance to procurement and then dove down into 2 of the 3 key aspects of GPO: process scope/breadth and organizational scope/breadth (or “reach”). So, you may define a process such as category management to be very broad, and you may adopt it globally across all your business units (and across multiple spend categories), but you may not manage that end-to-end process very well in terms of the “quality” of the process ownership. I'm not talking about process quality in terms of defect rates and such, but more broadly. Let me explain...
When Ford pursued a light-weighting program on its popular F-150 line of trucks, it had to understand both the existing and potential supply chain and capacity of the supply market (and different alternatives) years in advance of actual production. Yet when it comes to how companies consume and use third-party services, including contingent workforce management, few organizations formally translate and compare these forward-looking requirements to existing "supply."
Spend Matters welcomes this guest post by Becky Partida, research specialist, supply chain management at APQC. Many organizations have looked to the strategic development of supplier categories to align procurement efforts with business goals and provide value to the enterprise. APQC has found that organizations with category management programs in procurement have significantly shorter supplier lead times as well as faster purchase order processing.
I was talking to a category manager in the marketing space who I’ve known for decades about his category management plans for 2015. He had a successful year in 2014 driving value in the public relations category but was now looking at broader marketing promotions and, of course, the impact of digital marketing. His stakeholders are in multiple business units and regions, and his expanding “market basket” is becoming highly multivariate in terms of how you break it up by business unit, region and type of service (by process/sub-process; digital vs. conventional, etc.).