There’ve been numerous studies that have asked finance executives to rate procurement effectiveness, with a focus on the credibility of the procurement-cited savings and whether the results are dropping to the bottom line (I even led such a study over 5 years ago). Not surprisingly, there are clearly some capability gaps here. But, is this really the right question to be asking finance folks? First of all, you have to consider why these gaps occur at all. We take a look at this issue in this post and also will be conducting a study in partnership with ISM on the topic.
Category Archives: Friday Rant
We’ve been in touch with a lot of folks going through procurement technology selections. And, the good news is there’s lots of activity – more than ever, actually. More procurement teams than ever, too, are investing the time – often with other stakeholders such as AP and IT – to gain intelligence on the market and their various options rather than jumping to conclusions in selection processes. But on the negative side, one trend we’re seeing is executive sponsors outside of procurement making a play to work Ariba (and other SAP cloud solutions – Fieldglass, Concur, etc.) into a process that circumvents a traditional sourcing process applied to technology.
Spend Matters welcomes this guest article by Jim Kiser of GEP. There comes a point when management tasks procurement to save money quickly due to some recent poor performance or profit results to the financials. Either raise sales, cut staff or reduce cost of goods sold in order to get profitability back on track. One way to drive savings quickly is through the use of e-auctions or online electronic bidding events. These events can help to save money but also can have a big trade off; loss of relatively healthy supplier relationships or creating more “arm’s length” styled commercial ties to the supply base for large spend categories.
It’s almost that time of the year again (at least we hope), when the freezing winter thaws into spring and the many feet of accumulated ice and snow in Chicago and the East Coast is replaced by, well, mud. Once this transformation starts, you know procurement conference season is right around the corner. That and the Chicago Cubs starting to once again migrate their way into last place (which usually happens around the end of April). Indeed, spring is nearly here, along with the dozens of procurement shows that kick off the warmer months. I am often asked by just about everyone in the market: Which procurement events should I attend?
My new L.L. Bean wool, insulated coat was going to be great. Or so I thought. At nearly $230, I expected a quality item. What I got was a broken zipper, a $45 tab for replacing it and a less-than-helpful customer service representative. Eventually, they got it right, reimbursing me for the replacement zipper. But the whole experience has turned me off to the brand. And who knew a zipper - such as low cost component - could have such an impact?
I admit to not being the most technologically-literate person. But despite the limited technology knowledge I have chosen to acquire, I do know one thing: when you buy a brand new laptop, it’s supposed to work. It is supposed to operate without incident for a period of time that is longer than 30 days. It should not require a 3-hour call on a Friday afternoon with technical support personnel. For our company's new Lenovo laptop, however, this is exactly what it took to remove malware that somehow infiltrated the Windows operating system.
Being a relatively frequent traveler, I’ve been noticing a steady increase in the placards employing me to conserve energy, to conserve water (by not washing my towels) and to appreciate all the wonderful eco-friendly things the hotel is doing to be more sustainable and help us all be more healthy and happy. And then my eye turns to the coffee condiments...
The 2015 prediction season is thankfully winding down. We, too, are wrapping up our predictions, many of which are really a continuation of some 2014 predictions, and, like other predictions, are updates on some trends that get extrapolated forward. We don’t fashion ourselves as “futurists,” and if we did, we’d have to incur Dr. Lamoureaux’s wrath on the topic and also on predictions in general. Anyway, prediction season is a good time for providers and pundits to invent new buzzwords that try to encapsulate a trend, but more specifically, also try to support a new concept or marketing push that they like. So, for an analyst firm, this might go something like: “Supplier Management is dead: Long Live Supply Base Management!” or “It’s time for Procurement 4.0!”
For many firms, category management is a foundational element of their procurement operating models. I’ve defined category management as the cross-functional (and cross-enterprise) processes for managing the lifecycle of supply for major spend categories – within which strategic sourcing is obviously a core process. Category management typically organizes clusters of supply markets for such management and assigns responsibility of these processes to category managers who will then “plug into” the organizational hierarchy depending on the operating model. The organizational hierarchy itself is driven by geography, product/service line (which is focused on the supplied solutions or the served industries), function, etc. But wait, it gets more complicated.
At least, I conclude that American Express' expense reporting tool's developers don't use the card themselves. Maybe it isn't popular in India, or wherever the new AmEx site was coded. It certainly could not have been built by an experienced card user here in the US. In fact, the redesign of the AmEx tool is so bad that it has to be labeled as beta - not "client ready," to use financial industry terms. So what are the problems?
While in business school, together with 5 other students and the dean, I was given the opportunity to have lunch with GM's then-CEO Jack Smith (GM CEO between 1992 and 2000), and I asked him why GM wasn't using its German brand better. I brought up an example from Japan – where I had lived up until a few months earlier and where GM was actively promoting its full-size vans at the time. Sales of these absurdly large, gas guzzling, and dubious reliable vehicles must have been negligible. I never saw one on the roads. I suggested GM leverage Opel, which already is the right size for the market.
Don't you just hate it when applications and web-based SaaS solutions look cool, but once you start using them, you run into issues with the slick buttons (having to click once on everything to figure out what the icon means) or you just can't figure out where a certain feature is (assuming it even exists, but how can you know for sure?). "Mystery meat" is what I call these features.