Category Archives: Procurement Strategy & Planning

Peer Learning: Overcoming the Biggest Procurement Challenges in Grocery, Retail

Spend Matters welcomes this sponsored guest post from Brian Miller, vice president of services at Intesource, a PROACTIS Company.

The grocery and retail markets are highly dynamic and exceptionally competitive. Facing historically tight margins due to the extensive resources it takes to keep product quality high, procurement teams in these sectors need to be on top of their game in order to compete and remain financially viable. Business today isn’t easy, but in the face of all these pressures, many grocers and retailers are thriving. What’s their secret? Incorporating a sophisticated, strategic approach to sourcing as part of their overall procurement strategy.

Direct Procurement in 2016: Manufacturing, Commodity Management, Supply Chain and More

direct materials sourcing

There are many who would argue that direct procurement is procurement. Yet I typically define direct procurement, in the broadest sense, as referring to the sourcing, buying and management of ingredients, materials, parts, components, assemblies, packaging and related items, and services associated with “spend” that is accounted for under costs of goods sold (COGS) from an accounting perspective.

Procurious and SpendLead: Social Collaboration is Finally Taking Off in Procurement

social collaboration

Over the past few weeks, I’ve caught up with two upstart players specializing in the social collaboration sector for procurement. These two providers could not be more different. One, Procurious, is very much a private Facebook/LinkedIn-type model for procurement practitioners to network with themselves and share ideas, practices and more. The other, SpendLead, is centered on managing new types of supplier information and driving procurement interaction with a firm’s current and potential suppliers, as well as and supplier interaction with current and potential buyers.

Don’t Just Reduce Costs — Reduce Trade-Offs!

supplier scorecard

One of the most critical competencies that a supply chain organization can master is the ability to not only recognize trade-offs but to reduce them. Progressive procurement organizations don’t just get measured on cost reductions alone — especially just purchase price — but rather work cross-functionally with stakeholders to develop supply requirements and related performance metrics needed to support their particular objectives, and then work backwards to optimize the balanced scorecard so that all stakeholder objectives are considered and optimized.

ICYMI: How Procurement Sometimes ‘Juices’ Results, Looks For A Quick Fix

procurement

What do weight lifting and weight lifting supplements have to do with procurement? A lot, according to Jason Busch, Spend Matters founder and head of strategy, and Richard Lee, CFO. So much, actually, that the two teamed up to pen a six-part series on the topic over the holiday season. We wanted take a second to highlight this series in case you missed it on the site late last year during Christmas and New Years. Check out all six parts!

Intelligence and Training: How to Get Marketing Spend Under Management in 2016 (Part 6)

Sergey Nivens/Adobe Stock

As we began outlining in the previous installment of this Spend Matters Plus series, better RFX management and, in particular, better modeling and cost analysis are just the beginning of the value good procurement platforms and processes can bring to marketing. The next level of value is in what procurement, and marketing, can do with the data collected not only from the RFX but also from deliverables and metrics throughout the creation and implementation of the campaign the agencies are engaged to support. With the unprecedented spend detail that a good procurement platform can capture, a good analytics and business intelligence platform will provide marketing with visibility into actual costs and comparisons with benchmarks, analytics by spend type, project type and agency, and cross-correlation with sales for insight into value-generating spend. Letting the light shine in through marketing-specific spend analytics capability represents a huge opportunity. But this is nearly uncharted territory for far too many organizations. The first place to start is investing in the time and effort to capture sufficient detail in all transactions so that you can create meaningful reports and trends. Join us as we conclude this series, outlining how to tap into the intelligence, visibility and value-add training that could ultimately help procurement get marketing spend under management this year.

Optimize Your RFX Support: How to Get Marketing Spend Under Management in 2016 (Part 5)

marketing spend

RFXs are expensive to run on either side of the fence, for marketing and for agencies. Granted, the bulk of this expense comes in the form of soft costs. But the undertaking is considerable and carefully vetted among agencies. Spend Matters has learned that some agencies estimate their total cost, when all hard costs and revenue losses – from assigning talent to proposals instead of projects – are factored in, to be around $200,000 per RFP, on average. This point is important to emphasize: agencies are quite picky about the clients and projects they bid on. So if the RFP does not grab their attention quickly, it will be dismissed, and so will your organization. Thus, if you can convey to marketing that your vast experience with services RFPs can help marketing get a better response rate, and better responses, it is more likely to be receptive to your words. So how do you go deep on RFX support messaging? In this installment of our Spend Matters Plus series, we outline seven focus areas that will help procurement practitioners guide marketing through the RFX processes.

Direct Materials Procurement Strategy: 4 Questions Every Commodity Buyer Needs To Ask (Part 2)

direct materials procurement

It’s nearly impossible — that is, if done right — to separate out direct materials procurement strategy from commodity management (inclusive of commodity, raw material and ingredient sourcing). Yet far too many procurement and supply chain organizations we see take a less-than-scientific approach to commodity buying strategies. (And no, for those technology-centric organizations, simply buying a commodity management solution to manage exposure and positions is not a strategy — it’s merely a tool.) This two-part Spend Matters Plus series takes aim at a lack of standardization in strategy development for commodity buying by urging procurement organizations to ask — and answer — four core questions necessary to develop a commodity buying strategy.

Offering Agency Management Support: How to Get Marketing Spend Under Management in 2016 (Part 4)

marketing spend

Marketing is all about generating demand for the organization’s products. Thus, value to marketing is any activity that has the potential to increase demand. The primary activity marketing undertakes to increase demand is advertising. This activity is primarily accomplished through contracting agencies with the creative talent (the “magicians”) that marketing believes has what it takes to produce the magic that will increase demand with the fresh and innovative campaigns and messages these creative types will generate. Thus, a big part of marketing is agency management. Often the greatest value that procurement can bring marketing, at least in marketing’s view, is any process, methodology, technology or resource pool to help marketing better manage its agency relationships. If marketing already thinks those relationships are good, procurement can still help foster more successful agency relationships. How will procurement accomplish this? In this installment of our six-part Spend Matters Plus series, we take procurement practitioners through how to clarify and pitch the value message of certain management processes for marketing, ultimately helping marketing close the loop between what was created and what was delivered.

Engage Executive Support: How to Get Marketing Spend Under Management in 2016 (Part 3)

marketing procurement

How best to connect with the marketing team? As a procurement professional, you probably hear this over and over again from bloggers, analysts, consultants and even vendors who stress that a new initiative will not be successful without executive support, and engaging with marketing is no different. Even if you talk the talk and walk the walk (as we analyzed in the first part of this series), and come bearing great suggestions to address marketing’s value drivers and increase the overall return from the marketing spend (our point in Part 2) — even if you can use this newfound knowledge to get marketing to lower the drawbridge and invite you into the foyer, it doesn’t mean the wizards of wondrous words are going to take you seriously or invite you back to dine in the great hall. One has to remember that marketing has a right to be cautious, and maybe even distrustful, of your new value-generation messaging because the last time procurement came knocking, it was to cut costs, which is not necessarily beneficial to marketing. Thus, it’s only reasonable that they would want some c-suite assurance that this time it’s different. So how do you get the right executive support? That’s what we’ll tackle in our third installment of this Spend Matters Plus series.

Understand the Value Drivers: How to Get Marketing Spend Under Management in 2016 (Part 2)

marketing spend

In the first installment of this Plus series, we discussed how, despite the fact that we have known for almost a decade that the marketing category contains significant value that can be unlocked with good procurement practices and processes, in most organizations, marketing is still a “sacred-cow” category that is out of procurement’s reach. In these organizations, marketing still insists that it cannot be constrained by procurement logic in its quest for the best agency magic and that it’s not how much you spend but how much business value you generate. And while this is mostly true, it’s not entirely true. It’s about spending wisely so that every additional dollar of spend generates additional, measurable value for the brand. Marketing’s entire purpose — increasing sales and brand value — cannot be done without spending hard dollars, and, generally, success will correlate with how much is spent. As a result, the goal is to always increase, not decrease, the available marketing budget. This is one category where it’s not about savings but about value delivered. As a result, the money needs to be spent on agencies that produce campaigns that generate results, and on third parties that provide the products and services that support the campaigns (print, digital media, etc.). However, one cannot even begin to contemplate who the right parties are until one understands the value drivers that need to be considered and addressed. So how to make logic + magic = profits? First, in this installment, we will discuss the four biggest value drivers to marketing — understanding those will be key to gaining their trust and getting their spend under management.

5 Data-Driven Supply Chain Challenges to Overcome in 2016

Spend Matters welcomes this guest post by Antonia Renner, of Informatica.

Supply chain, sourcing and procurement executives are feeling immense pressure to cope with the expansion into global markets, waves of disruptive innovation, rising customer expectations and complex regulatory requirements. These are catalysts that require supply chain management strategies to become bimodal and to make a shift from tactical to strategic. For 2016, I see leading supply chain organizations making these top-five data-driven supply chain management challenges a priority.