Category Archives: Supply Management

Does Increased DPO Actually Destroy Enterprise Value?

- September 4, 2014 2:28 AM | Categories: Best Practice, Suppliers, Supply Management

1404632621ye0k6 My old employer The Hackett Group sent me the results of their latest annual study on working capital performance (a downloadable version of the study can be found here). Hackett’s subsidiary REL Consultancy (or “REL” for short) annually extracts, adjusts, and reports on the working capital performance (and overall financial performance) of the top 1,000 publicly traded firms in the United States. For context, the average firm turnover is $11 billion in revenues and median turnover is $4 billion.

REL runs its business primarily based on a singular assumption and value proposition: Reduce your Days Working Capital (DWC) because less working capital is better for the business. Cash that is “liberated” from balance sheets can be used for stock buybacks, R&D, M&A, etc. Improving working capital is a no brainer, right? Unfortunately, this story is just that: a nice story.

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Ask the Expert: Should You Be Worried About Ebola and Your Supply Chain?

Should you be worried about Ebola? What can you do about this issue, and similar illnesses that might disrupt your supply chain and/or put your employees and suppliers at risk? On this week's Ask the Expert webinar, on Thursday 8/14 from 10-10:30am Central, Spend Matters VP of Research Thomas Kase will provide an overview of the issue and possible ways to improve your understanding of the level of exposure – as well as ways to better alert employees and third parties when needed. We’re also pleased to have a special guest joining Thomas: Heiko Schwarz, Managing Director of riskmethods. riskmethods is a German firm focused on global supply basic risk visibility and mitigation. Spend Matters Plus and PRO members, click on through to register for this special event!

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LeanLinking Brings Social Media Principles to Procurement and Supply Management

We've been talking for some time on the different Spend Matters sites about how social media principles and approaches will inevitably make their way into the business and procurement world, yet progress has in reality been pretty slow. The innovative Rollstream has been assimilated into GXS, now itself part of OpenText, and seems pretty low-profile these days. However, there are signs that things are changing. Sourcemap is a more recently established firm that has an interesting approach, including some aspects of supply chain collaboration with a social media slant. Mark Perera, one of the founders of Procurement Leaders, is involved in Old Street Labs, whose new Vizibl platform is in its testing phase (we'll feature it as soon as you're ready, Mark). The platform looks to use some of the core social media principles in a business environment. And now we have LeanLinking starting to make a splash. This Spend Matters Plus research brief, by Peter Smith (managing editor of Spend Matters UK/Europe), looks at what LeanLinking has to offer and which organizations would benefit from the technology.

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Who Put The Supply In Supply Chain Management, and Why?

- July 14, 2014 2:27 AM | Categories: Commentary, Supply Management, Supply Networks

Spend Matters recently brought attention to that very question: Who put supply in supply chain networks? The question is a fair one, and yet it may lead to the follow-up question of how it is that this attention suddenly becomes necessary. Look, it is wonderful that the sourcing and procurement employees from the supply tent are peeking through the flaps of the supply chain management tent. The relationship between the two worlds has been reminiscent of members of Congress linking arms to sing “We Shall Overcome.”

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Announcing a New 2-Part Research Series on Supply Networks

For manufacturers, the CEO agenda is about innovation and global growth. Companies that innovate and compete on customization to markets and customers will increase revenue and market share. For the CFO, this profitable growth agenda must also be predictable – and efficient. The head of supply chain must then align with these strategic priorities for reducing cost and risk, while supporting growth and customer satisfaction.

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Settling the “SCORe” with “Supply” at the Core: It’s time for Supply Management 2.0

- June 3, 2014 3:33 PM | Categories: Supply Management

As supply networks are becoming more complex, componentized, outsourced, and global (as well as faster, riskier, and more regulated), the capability of managing supply (i.e., “Supply Management” to manage a network of supply) is promoted from a siloed set of functional process to an integrated strategic one. So, if you want to “orchestrate” it, whether you provide products, services (including information services), or both, you need to collaborate fluidly in a multi-tier and multi-level fashion that orchestrates both the process silos and the information silos. For lack of a better term, think of this as Supply Management 2.0. It basically expands the vision from a traditional procurement-led sourcing process, typically managed via ERP and/or stand-alone procurement applications, to a cross-functional and cross-enterprise “platform” for orchestration of all critical supply resources in the supply network (materials, capacity, logistics, capital, etc.) across the supply tiers. In this Spend Matters PRO research brief, Chief Research Officer Pierre Mitchell argues that it’s time to flip the traditional paradigm of supply management from not just a new faceplate on the traditional purchasing function, but also from the sourcing component of the “sourcing and procurement” moniker that many practitioners use. Having strategic procurement be merely about sourcing as a serial step in an end-to-end lifecycle is a mistake. Not a Spend Matters PRO subscriber yet? Contact us to ask about a 30-day free trial.

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Exploring the Intersection of Procurement, Contracting, and Legal: A Future Look Courtesy of KPMG

In recent weeks, we’ve been highlighting some astute observations from a KPMG paper exploring the future of procurement in 2025: FUTUREBUY: The Future of Procurement – 25 in 25: Delivering procurement value in a complex world. One section that has not received enough attention is the intersection of procurement with contract negotiation, implementation, management, and legal. This is a topic that IACCM, the organization Tim Cummins has led for years, does a marvelous job exploring – but unfortunately has not attracted enough procurement folks into the fold as it should. But we think this will change, especially if you read KPMG’s and IACCM’s thoughts on the subject.

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Exploring A/P and Procurement Best Practices at P&G: Lesson 10 and Conclusion

Lesson #10: Make Your Invisible Hand Visible Key to any procurement journey is the demonstrated ability not only to implement successfully, but also to storyboard that success, celebrate it, self-fund your projects, and finally, promote success to build the procurement brand and support the broader company brand. P&G is no stranger to this, having won the now-defunct Purchasing Magazine’s Medal of Excellence in 2008 and remaining a benchmark company that many others look up to. Of course, some external communication and validation is crucial for the following: Attracting top talent Executing on corporate programs (e.g., working capital improvement) Protecting the […]

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The Vendor Management Office – 8 Principles for Success

More enterprises are taking a look at establishing a vendor management office (VMO) to make IT sourcing more effective. Companies are creating IT VMOs for reasons including the rapid growth of IT spending within the business, the decentralization of technology purchasing, and increased complexity in vendor pricing and licensing. There are no hard and fast rules for creating a VMO. Some companies have a very formalized approach with dedicated staffing and clearly defined roles and responsibilities. Others are more loosely organized. In both scenarios, the VMO’s effectiveness relies on the adherence to eight guiding principles.

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Lesson #7: The Hand Must Be a Helping Hand (Not Brass Knuckles)

- June 18, 2013 2:34 PM | Categories: Supply Management, Supply Networks

“Rather than a simple ‘mandate’ which we believe could be punishing for our small/midsize partners, we have developed a solution with pre-selected partner-banks that will enable us to offer a financial product called ‘Supply Chain Financing’ (SCF) that can create a win-win-win for our external partners, P&G, and the banks. This approach not only will help mitigate some or all of the negative impact on the working capital of our external partners, but in many cases will create value, by enabling access to low cost capital for reinvestment. This solution demonstrates P&G’s commitment to drive sustainable value through improved productivity for P&G and our business partners.”

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Stripping Supply Management of Supply Risk Responsibilities (Part 1)

- December 11, 2012 7:12 AM | Categories: Jason Busch, Supply Management

In sales, it’s often said that you earn the right to do business with a customer. The opposite is all too often the case for procurement – the business and suppliers must deal with you in some capacity whether they want to or not. In recent years, supply risk has risen to the forefront of new procurement responsibilities and concerns. ISM has even created a new risk board (of which I was a part), webinar series and conference focused on supply risk. Yet we wonder if this effort may be futile, as finance organizations slowly strip procurement and supply management […]

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LA Port Strike Highlights Labor’s Role in Supply Management Risk

- December 4, 2012 7:12 AM | Categories: Jason Busch, Supply Management

Over the past week, the International Longshore and Warehouse Union has held thousands of containers hostage, shutting down shipping at two ports on the US West Coast. While current shipping delays are impacting hundreds of manufacturers importing from China and other Asian ports (primarily), the greater takeaway for supply management professionals is the importance of factoring labor into supply risk equations. While we often think of individual suppliers as primary risk drivers in risk calculations, labor can play a role as well – not to mention hidden suppliers, including ports, which do not even show up in most multi-tier supply […]

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