The Cost Management Category

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Here’s Why You Should Conduct Price Benchmark Analysis for Every IT Purchase or Renewal

If you remember nothing else about this blog post, remember this statistic: 5%. Those are the odds that enterprises are paying a fair price for any given IT purchase or renewal if they are not performing IT price benchmark analysis. In the first half of 2018, only 5% of the IT purchase quotes reviewed by NPI were priced at fair market value based on market benchmark comparisons. That number is dangerously lower than what it was just a few years ago when “fairly priced” IT purchases and renewals hovered around the 30% mark.

Spend Management Versus E-Procurement: Is There a Philosophical Difference?

Editor’s note: This is part of the Ask Spend Matters series, where readers send in their burning questions about procurement and supply chain.

What is the difference — philosophically — between spend management software and e-procurement software? One of our readers recently posed the above question, noting the amount of noise out there over spend management and the general sense of confusion as to what constitutes spend management and what constitutes e-procurement. We’re always fond of these fun philosophical questions, so we asked our own Spend Matters analysts and editors for their opinions on this one.

Why E-Commerce Trends Necessitate the Adoption of Automation and Analytics Tools in the Retail Industry

In November 2017, the popular online retailer ASOS introduced a new “try before you buy” service. The scheme, as the name suggests, allows customers to order multiple items — say, the same shirt in different sizes, or different items altogether — and try them on. Then customers can return the items they do not want, and ASOS charges only for the items they keep. This flexibility may be helping e-commerce businesses win market share, but for many retailers, the inevitable flood of returns make for a growing risk, a report from Brightpearl finds.

Bringing Procurement Rigor to Merger Integration

Spend Matters welcomes this guest post from Bernard Gunther, co-founder of Spendata.

Mergers are rationalized by the expectation of post-merger synergies, a major one being cost reduction. However, cost savings opportunities that are routinely exploited by procurement are rarely a focal point for “clean teams” in pre-merger scenarios, or by the merged organization in the key 100 days of post-merger integration (PMI). In fact, the majority of mergers rarely deliver all of the expected cost savings.[2] In contrast, procurement can play a crucial role in planning for and delivering cost savings typically overlooked during the pre-merger analysis.

Group Purchasing Organizations: Supplier Perspectives and the Evolving GPO Landscape [PRO]

Joining a GPO is like getting a Costco membership. You know you’re not going to get ripped off, so you probably won’t put much thought into joining. But therein lies the rub for GPO members. Like Costco, a GPO is a one-size-fits-all marketplace where you may overbuy when you get there or underbuy by not getting there at all.

In an increasingly Amazon-dominated world, however, this model is not the only available option.Today, the assortment and pricing of items available to consumers are tuned to the user and monetized most efficiently by intermediaries that can source better and optimize for lowest total landed costs better than individual buyers. Procurement organizations are now looking to bring this experience to the complex world of B2B purchasing. And where GPOs fit into this more sophisticated equation is not a simple answer (many are still trying to figure it out themselves). 

But that doesn’t mean GPOs will go the way of the 1980s big box retailer. Instead, GPOs will have to take on a role beyond the race to the lowest price. This multipart Spend Matters PRO series explains what motivates GPOs and helps procurement organizations best decide when and how to engage them. In this second installment (see our initial GPO introduction), we explore GPOs from a supplier perspective and offer recommendations for vendors working through GPOs to make these relationships more successful. We also explore how GPO options and capabilities are evolving and segment the GPO market by model and type and provide case example looks at different GPO business models. These include vertical/industry independent, member-owned, horizontal, affinity, category-specific and procurement technology led GPO models. 

An Introduction to Group Purchasing Organizations (GPOs) [PRO]

purchasing

Group purchasing organizations (GPOs) are not a new idea. Agricultural cooperatives aggregated the buying power of farmers hundreds of years ago. That said, GPOs have evolved quite a bit, and the infusion of new digital capabilities is taking that evolution to an even higher level. This evolution also means that procurement organizations must go in “eyes wide open” to best utilize this important tool in the procurement tool belt.

Not all GPOs (or GPO models) are the same. Understanding the differences will make you a more educated, and thus likely more successful, buyer. Therefore, we’ve decided to delve a little deeper into this obscure sector of the procurement provider market and shed some light on how to best extract value from it.

This multipart Spend Matters PRO brief is designed to demystify GPOs and put procurement organizations on the same information playing field as the GPOs attempting to sign them up, expand their utilization of contracts and sell additional services. Within this series, we will explore GPOs by type, as there are several business models in play, and by industry segment, as GPOs are heavily embedded in certain markets and are little more than a supply option in others.

This first installment in our GPO coverage:

  • Defines what GPOs are (and are not)
  • Explains how GPOs operate
  • Explores GPO “spend coverage and fit”
  • Analyze the GPO market segments and how to engage them
  • Offers tips and tricks for engaging GPOs based on their own constraints/models
  • Provides both basic and advanced takeaways for procurement organizations that are thinking through GPOs as an alternative supply option
  • Offers a checklist of activities to consider when sourcing GPOs

From Process Efficiency to Savings: 12 KPIs for Business Spend Management

spend visibility

Coupa recently released its 2018 benchmark report on measuring business spend management success by means of 12 key performance indicators (KPIs). The 12 KPIs, which cover process efficiency, digitization, compliance and savings, were based on anonymized data from the top quintile of Coupa customers’ performance in each KPI. In this post, we will look in more depth at each of the four categories

Top Supply Chain KPIs for 2018: Practitioners Weigh In

For procurement and supply chain professionals, a refresh of their organization's key performance indicators (KPIs) have undoubtedly been on the brain since before the winter holidays. Now that we’ve leapt into 2018, many realize it’s time for less thinking and more action.

5 Key Lessons Given and Learned: How Procurement and IT Can Work Together to Transform the Business

IT

Before taking part in a webinar with Rimini Street on how procurement and IT can more effectively work together to shift focus from maintaining existing systems to investing in innovation, our intrepid founder Jason Busch wrote, “I’ll be learning as much about this topic during the event as I’ll be contributing to it.” Hopefully I’m not alone in wondering what Jason’s lessons learned indeed were during the ensuing discussion. Banking on that, we caught up with Jason on his takeaways from the event.

How Do Procurement People Buy Flowers? Or, Using Procurement Smarts in Everyday Life

Procurement is basically shopping with a strong emphasis on value. Does that mean procurement people also better shoppers in their everyday lives? To find out, I asked around the office: “What have you recently used your procurement smarts to buy for yourself?” Take, for example, flowers. They are ordinary and yet can be exorbitant in cost. And despite what it may seem, this is a complex purchasing category.

3 Hot Topics Procurement Won’t Be Able to Stop Thinking About Even at the Beach

As we slog through the dog days of summer, many procurement folks are letting their minds wander to more pleasant thoughts — a drink by the beach, a few rounds on the back nine, a moment of peace (however fleeting) without the constant ding of email notifications from a smartphone. And as they pack for a well-deserved vacation, they’ll try leave behind some of those more persistent thoughts and concerns, as well. What has been top of mind for procurement this year, and what has stressed them out to the point where they need to get away from it all for a bit? Here are the top three topics our readers have been sweating over for the last seven months.

Why Procurement’s Persistent Tail Spend Problem is Now Finally Solvable

Tail spend frustrates many procurement groups. It’s messy, it’s complex and it’s time-consuming to tackle. Inking big deals and keeping stakeholders happy seem like far better priorities for the typical category manager, since that’s how he can turn executive heads and make his daily life simpler. At least, that’s how it used to be. These days tail spend is trending — and for good reason. Here are three reasons why this persistent thorn in procurement’s side is finally getting the attention it deserves.