Category Archives: Category Management

Managing Complexity – A Reevaluation of Energy Procurement Strategy

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.

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Spring Cleaning Time in the Procurement Household: A Checklist

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.

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SKU/Supplier Rationalization and Demand Management: Four Key Tips Not to Forget

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.

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Improving Cost and Efficiency of Plant Operations

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.

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SKU/Supplier Standardization in Procurement: Simple Best Practices

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!

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Why SKU/Supplier Standardization is More Difficult Than It Looks: Choosing the Wrong Products

Another related risk of standardization my colleague Peter Smith discusses is that after going through a rationalization exercise, the selected product ends up not meeting the needs. In this area, Peter explains that we observe "over-optimistic approaches to standardization … which results in a standard product or service being purchased that does not actually meet the needs of the users, whether they are internal stakeholders or ultimate consumers." Read on for further insights from Peter's paper.

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Concur and Procurement: Looking to the Future and Innovation Today

- May 19, 2014 2:15 AM | Categories: Category Management, Invoicing, Travel

Within procurement, many know Concur as a T&E provider, and Concur’s strength in this area no doubt continues. But the company has more to offer procurement than just a T&E reporting tool (albeit an extremely slick one). In this Spend Matters PRO research brief, analyst Thomas Kase will look at some other tools from Concur, show you some screenshots of what their capabilities actually look like, and speculate on where they might be going with their offering. Not a Spend Matters PRO subscriber yet? Contact us to inquire about a 30-day free trial.

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Why SKU/Supplier Standardization Matters for Basic and Complex Procurement Categories

- May 15, 2014 6:29 AM | Categories: Category Management, Learning / Research

When it comes to demand management, one of the first steps that many procurement organizations take in driving to indirect category strategy (office products, MRO, etc.) is attempting to reduce the number of similar SKUs that the organization purchases. There are many reasons for this and such strategies are not just about driving unit cost savings (e.g., SKU rationalization can take into account green/CSR strategies, supplier diversity, supply risk management, balance of trade and many other factors). But at its core, standardization is certainly about leverage, if not savings directly.

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Exploring the Evolution of IT and Strategic Sourcing (Part 1)

When I first read about strategic sourcing in Forrester, IDC, and Gartner reports back in 1999, I thought the analysts had no clue what procurement was. But then I realized that they were specifically referring to another IT-centric definition of strategic sourcing, rather than one focused on broader procurement, finance, and supply chain. I came across a more recent article in Data Center Dynamics.

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Case Study: Coca-Cola Bottling Co. Consolidated, Taulia, and Dynamic Discounting

file6941274973247 Coca-Cola Bottling Co. Consolidated (CCBCC) is the largest independent Coca-Cola bottler in the US. It has over 10,000 suppliers, about 25 percent of which are non-PO based. One of the supplier segments that represents a big opportunity within these non-PO invoices is the area of trucking. Historically, many of these small businesses have had to pay receivables factoring firms very high interest rates, and that is money that is taken out of the CCBCC supply chain. The catch is that CCBCC can provide a cost of capital that rivals the factoring firms. CCBCC decided to step in and help with the suppliers’ liquidity problem by giving them the option to take early payments in return for a discount. I interviewed CCBCC's Steve Richards, who gave me an account of the company's experience implementing Taulia.

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How to Manage Complex Categories

- April 7, 2014 6:30 AM | Categories: Best Practice, Category Management, Download, Featured, Procurement

When looking at complex spend categories there are a number of things to take into consideration. First: Don't make assumptions. Second: Gathering requirements from budget holders and users of the goods or services is vital. In this paper, Peter Smith of Spend Matters UK/Europe provides other important practices in executing category management processes.

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Catalog This: How Developing the Right Spend Criteria can Optimize your Catalog Rollout

Here's the scenario: An organization is going through the process of determining how best to improve supplier contract compliance and protect negotiated savings, and it decides that implementing e-catalogs is a key piece of this initiative. While the management of these catalogs and the content contained therein is another issue entirely, the basic premise is to ensure that the usage of these catalogs results in increasing compliance to active contracts and simplifies buying for end users. That being said, the question remains: What is going to be put into these catalogs?

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