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."
Category Archives: Category Management
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.).
In this week's Ask the Expert webinar tomorrow, Dec. 12, 2014 from 11-11:30 a.m. CST, Spend Matters Plus/PRO members will be treated to a talk from Xavier Olivera of Spend Matters Mexico/Latin America. Xavier will guide you through the creation of an MRO category workbook to illustrate how rich this type of practice could be for any sourcing and knowledge management effort. Specifically, he'll walk through category scoping, opportunity assessments, how to profile internally and externally, how to develop a strategy, and finally, the role of supplier management in all this. Plus/PRO members, click through to register.
In the world of procurement, there is a handful of strategies that can be adopted and reused across categories and clients. This can create a redundancy that slows innovation and prospects of future growth. GEP's Sanyam Khurana recently met and talked with the owner and staff of a small bakery in New Delhi and observed that there are many parallels between how this small outfit operates to what is and should be practiced at larger organizations
As we continue our coverage of Accenture's Spend Trends Report, we turn our attention to the topic of energy prices and cost pressure. A number of Accenture’s findings are actually quite similar to a longer-term perspective we presented in a recent Spend Matters PRO research brief titled "Will the Cost of Energy Increase? On Statistics from the US Energy Information Administration." As Accenture notes in their analysis, energy prices are continuing on a long-term up-trend with short-term pullback and volatility along the way, albeit with a underlying long-term inflationary undertone.
Basic sourcing tools, especially those integrated with broader source-to-pay suites or the stand-alone capability of ERP providers (and those ERP providers have acquired), tend to come up short with specialist providers in a range of areas on a functional basis. But from a pragmatic perspective focused on business requirements, there are a number of areas where lower-end tools tend to strike out fairly quickly. These include the ability to support centralized procurement efforts – including those organizations with centers of excellence (CoEs) – along with decentralized execution mapped to centralized requirements and processes.
There are few areas of corporate spend that invites as much fierce debate in strategy as the area of energy. The sheer number of purchasing mechanisms and strategies available can be overwhelming, and the advice of consultancies and subject matter experts is often contradictory. The combination of electricity, natural gas, and fuel oil is frequently one of the top five areas of indirect spend, and some organizations with energy-intensive manufacturing processes build energy expenditures into standard costs. Such a critical and complex category requires a clearly defined management strategy that is flexible enough to evolve with changing internal and external conditions.
Spring cleaning is just as appropriate for most procurement organizations as it is for each household. Here then, is a checklist of procurement’s spring-cleaning chores, with potential to yield far more than just a little loose change in the sofa and better visibility than Windex applied to windows obscured by streaks and grime. Zycus's Richard Waugh covers contracts, spend analysis, supplier management, and more in this guest post for Spend Matters.
When it comes to thinking through the best means of rationalization SKUs and suppliers for both basic and complex categories – and not having a centralized procurement function fall flat on its face when it comes to having the business successfully implement a program following a sourcing exercise – there are many lessons learned from those procurement organizations that have embarked on such programs before. My colleague Peter Smith encapsulates four of the most important tips that companies should not forget. Read on for what these are.
Capital equipment purchase is usually driven by business requirements and a stringent schedule, which makes it challenging to develop sourcing strategy while most of the MRO spend is to keep the plants operational. However, if procurement and supply chain take a step back and look at it holistically, they can identify some long-term solutions to these issues. Here are some tips to prioritize your approach.
The more complex a category (e.g., specialized services such as legal or marketing spend), the more likely an inexperienced procurement organization is to specify a supplier, SKU, or particular service that is likely to prove unpopular with stakeholders. But what best practices can centralized procurement and category management teams deploy for both basic and complex spend areas to avoid the “failure to implement savings” trap. My colleague Peter Smith has some ideas. Read on!