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Procurement in 2020: Aligning With Sales and Putting the Customer First

By 2020, it is likely that top performing procurement organizations will increasingly align their activities directly to the top-line producing component of the business: sales. As Deloitte notes, “local content and offset agreements in global markets are both formally stated on the national level (e.g., aerospace and defense in India, requiring local suppliers) and more open to interpretation in other markets (e.g., local supply agreements in China impacting different provinces and political relationships).”

A Procurement Transformation Cookbook: Part 1 – Creating the Value Menu [Plus+]

The intent of this series is to provide a cookbook of sorts around some basic counsel on procurement transformation. It is by no means a replacement for the high-impact and high-IP value that many procurement services bring as accelerants to a procurement transformation. We'll frame the piece as a series of questions. There’s even a chance we might put this into a flowchart someday (resulting in some truly impressive home décor, perhaps?). Anyway, here are some initial diagnostic questions to ask as you look to run and transform procurement.

Don’t Avoid Cost Avoidance (Part 2 – The CFO and CPO Fireside Chat)

In the first of this 2-part series, I argued strongly for the value of cost avoidance as an important performance metric. In this second part, I will illustrate the concept via a story of a CFO and CPO having a discussion about measuring procurement value. This is basically a pathetic attempt to write a procurement version of something like Eli Goldratt’s The Goal.

Invest to Prevent Maverick Purchasing

Despite having formal procurement processes, some organizations have staff members who engage in maverick purchasing—circumventing standard procedures to procure items individually. According to APQC’s Open Standards Benchmarking in procurement, bottom-performing organizations have maverick purchasing worth 10 percent or more of their total annual procurement value. For top-performing organizations, maverick purchasing represents only 0.24 percent of their total annual procurement value.

When Procurement Challenges Go Way “Back to the Future” – Over 100 Years to be Exact!

Sometimes, grounding ourselves in just how similar procurement’s challenges are today compared with those in the distant past can help set the stage for the type of punctuated equilibrium change that’s needed to propel the function to where it needs to be! Indeed, even in the second half of the 19th century, as KPMG observes, procurement could have a monumental impact on those organizations which embraced the role.

7 Cultural Habits of Highly Innovative Procurement Organizations (Part 1) [Plus+]

A neighbor and close friend of mine works for a well-known design company, and he and I have spent some time discussing what makes the company successful. He is a highly creative individual, but he emphasized to me that there are some “structural” aspects to the success of his firm. The topic of innovation is very popular in more advanced procurement organizations, so I thought I would take seven of the value statements made at this design company and apply them to the procurement setting based on what I’ve seen at other organizations. This is the first in a two-part article on establishing a culture of innovation. Here are the first three principles.

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.

A.T. Kearney’s ROSMA Procurement Benchmark: Is the Metric Ready for Prime Time?

We’ve previously covered A.T. Kearney’s ROSMA benchmark in two installments thus far. In today’s analysis, we’ll consider whether the ROSMA metric is “ready for prime time,” and if not, what areas we might consider addressing. But perhaps we should begin by posing the question and answering it: Is ROSMA ready for all the attention it will receive because of its ISM and CIPS affiliation?

Implementation Considerations in Quantifying and Tracking Hard Cost Savings [Plus+]

In my most recent Spend Matters PRO series on diagnosing the quality of your procurement scorecard, I discussed various types of procurement value measurement. This morning I’m going to dive into some frequently asked questions and cited issues regarding implementing the cost reduction related metrics. What are cost savings? Should we consider cost reductions or spend reductions? How do we define a baseline? How about when there is no cost / price baseline? And what tools can help me track these savings? Read on for my discussion of these and many other questions.

IQNavigator to Sell MSP Division and Focus on Technology

Earlier today, IQNavigator, one of the leading vendor management system (VMS) providers, announced it was selling off its managed services provider (MSP) business to MSX International. IQNavigator was, by spend volume, one of the top dozen MSPs in North America. We think that getting out of the MSP business makes a lot of sense for IQNavigator. On a high level, there are numerous reasons for this.

When Procurement Goes the Hub and Spoke Way

Spend Matters welcomes this guest post from Diptarup Chakraborti, AVP Marketing at Zycus. While organizations today are keen to implement an effective procurement strategy by streamlining key elements in the source-to-pay process, many of them face roadblocks because of the complexity involved in integrating different processes into the supply value chain.