Perspectives

Spend Matters Perspectives

NEW! When Sourcing Becomes Supply Chain


The migration to data-driven analysis as a constant must take place in procurement – and it is happening right now. Sourcing is becoming supply chain. This Spend Matters Perspective introduces readers to three specific case studies where we’ve seen sourcing become supply chain.

NEW! Contract Management: Making the business case for investment (part 3) – Identifying Opportunities


In the final part of this series, we look at the risks that can be mitigated through effective contract management, and pull together final thoughts on the topic.

NEW! Contract Management: Making the business case for investment (part 2) – Identifying Opportunities


In the second of this three part series, we look at identifying the various opportunities that can be generated from effective contract management.

NEW! The Great Debate: Will Supplier Networks Thrive, Implode, or Evolve?

Spend Matters recently hosted a webinar with Tradeshift titled The Great Debate: Will Supplier Networks Thrive, Implode, or Evolve? We loved the topic so much we decided to invite each of the participants to contribute an essay on the topic. The result is this collection of loosely coupled contributions by a range of industry experts. It includes commentary by Pierre Mitchell and Jason Busch of Spend Matters, Tradeshift’s Christian Lanng, and Jay Merenda, a procurement technology leader in the pharmaceutical industry.

Relocation Services or Mobility Services: What’s in a Name?


As part of our continuing series of white papers on often overlooked, but ripe service procurement categories — areas of spend typically held close by HR departments—allow us to introduce yet another candidate: employee mobility services, the category formerly known as relocation services. Although managing mobility services is old hat for medium to large enterprise HR departments, this category is genuinely new to the aggregation scene, so the savings opportunities for the biggest and best organizations remain noteworthy. In fact, we have seen savings that range from 10–30% on every employee move in some organizations.

Preparing for Procurement in 2020: Negotiation, Contract and Supplier Information Overload – Getting to Grips with Contract Management


In this paper, we share why contract management should be a key imperative for any organization, and needs to be fully supported by the procurement, supply chain/sourcing function, and leadership. We also zero-in on why contract visibility is such an essential first step in broader contract stewardship.

Procurement Systems Integration Within the Enterprise: Exploring Integration In The Cloud


P2P systems integration is a topic of interest that is rising to the surface as one of the top enablers (and requirements) for driving lasting eProcurement impact and change. To be effective, integration requires linking procurement and process more tightly across all a range of systems including ERP (financials), inventory management, human resources/human capital management (HCM), vendor management systems (VMS), customer relationship management (CRM) and other business applications.

For frontline employees, P2P can ideally serve as a bridge to drive greater accessibility into information contained across other systems – and likewise, can play a key role in the quality and use of data in other systems (e.g., supplier/vendor master). Yet systems integration and visibility is a key foundational component to enable the types of outcomes that typical frontline users are after whether they want to make a basic purchase and “do the right thing” or have a more advanced query or action they want to take. If you are looking for a resource that articulates a business-driven look at the benefits (and challenges) associated with many of the steps in eProcurement and broader P2P systems integration in a cloud environment, we encourage you to download this Spend Matters Perspective.

A Direct Materials Guidebook – Six Key Principles for the Manufacturing Road Ahead


Any future evolution of direct procurement will undoubtedly build on the significant shifts we’ve seen in global manufacturing in the past two decades. In this next stage of growth, Spend Matters believes technology will catch up to current market requirements. In addition to focusing on the business skills and process change required to drive a new level of direct materials sourcing and supplier management success, this transition requires a new system of record for direct materials as well as a new way of thinking about how best to support business requirements. During this time, direct materials platforms will become as important as transactional procurement (P2P) and VMS (services procurement) systems in the coming years.

This Spend Matters Perspective explores the six key principles in detail as well as the broader direct materials sourcing environment today. It concludes with a snapshot of some of the direct materials platform capabilities that companies will deploy in the decade to come.

Sourcing Rx Benefits: PBM Coalitions Offer Low Risk Prescription For Success


Entrepreneurs are forever plotting to disrupt the status quo by developing business plans that call for the disintermediation of established businesses whose contributions to the value chain make them seem vulnerable. And more often than not, almost all of the time, these start-ups and their backers find out the hard way that getting rid of brokers, distributors, aggregators, etc. just isn’t going to happen – at least not in their lifetimes. Why? Because the intermediaries clearly add significant value to both suppliers and end users or they wouldn’t exist in the first place. And history tells us that when an established intermediary’s value is challenged, like GPOs in healthcare were back in the 90’s, these big businesses are able to buy the time they need to improve their value propositions and quickly quiet (if not eliminate) the insurgents. When it comes to sourcing Rx Benefits, there are at least three intermediaries that are well established and need to be more fully understood.

Manufacturing and Direct Materials Sourcing: A Planning Guide for the Next Decade


As global manufacturing uncertainty continues into the second half of 2012, we still find ourselves (for the most part) largely mired in direct materials sourcing and procurement technologies of the past decade in manufacturing environments. Far too many organizations continue to struggle with driving adoption of SAP and Oracle eProcurement implementations and few have turned their consistent attention to a new wave of tools designed specifically to enable the types of direct materials procurement and supplier management capabilities that can bridge the gap between traditional purchasing and supply chain functions.

Here at Spend Matters and MetalMiner, we believe the next decade is going to be one where leading manufacturing organizations (from diversified industrial manufacturers to consumer packaged goods companies) will differentiate themselves not just by introducing the right talent into the procurement function – a major goal of the past decade – but also in how they build capabilities and practices around automated technology that transforms the way they forecast, negotiate, bring new products to market and manage extended tiers of suppliers.

Human Resources & Sourcing Turf Wars


SpendMatters, Healthcare Matters, and Allianza Partners have collaborated on a series of papers that will reveal dramatic opportunities in the strategic sourcing of fringe benefits. Our hope is that these papers will not only serve to shed light on these opportunities, but specifically uncover the good work that’s already being done in the trenches. Perhaps, the evidence we present might even help bring an end to the unfortunate and costly territorial games that continue to be played. The strategic sourcing of legal and accounting services went from taboo to mainstream about as fast as you can say “30% savings.” Despite such extraordinary price compression, HR departments have remained conspicuously successful at keeping strategic sourcing professionals out. Why? Well, like most good conflicts, the war between HR and Sourcing takes place on multiple fronts.

Beyond Sourcing and Supply Chain: Commodity Management Solution Fundamentals — Understanding Approaches for Pursuing the Most Volatile, Critical and [Often] Largest Component of Company Spend


Procurement executives who previously ran programs driving indirect and services procurement spend category cost savings, and direct programs to identify, qualify and implement global suppliers, now find themselves scrambling to renegotiate with suppliers who will no longer honor contract pricing terms. Yet typical discrete manufacturers, food and CPG companies across the globe are just beginning to address the structural changes they must make towards their organizations and procurement/supply chain orientation to thrive in the new market environment.

Accurate Supplier Data Creates Savings for Pharmaceutical Shared Service


Like most large firms that have grown by acquisition – and hardly any haven’t – the supplier data floating around inside the organization reminds me of Samuel Johnson’s quip about lies and the infernal side of statistics in that there is old data, missing data, or simply too much data. The company in the Accurate Supplier Data Creates Savings for Pharmaceutical Shared Service case study found that even though their supplier data issues were numerous, what clinched the deal was focusing their efforts on credit recovery – with a contingency-based component as added solution provider incentive. Download this perspective to read more about their business case and what exactly they achieved.

Getting Past the Existential Connectivity Funk: Stop Waiting for the Supplier Network Revolution


In Samuel Beckett’s Waiting for Godot, two chaps philosophize, debate and engage in quite a lot of self-pitying while aimlessly waiting around for a figure they call Godot (who never in fact arrives). The entire play, depending on one’s perspective, is an exercise in either rhetoric or existential thinking. But regardless of your vantage point, it’s pretty clear that the protagonists accomplish just about nothing by the end. Inaction – and the status quo – end up ruling the day.

Sourcing, Contract Management, and Supplier Management Cloud – Business Users Benefit From Savings Enablement


The past decade has seen significant reinvention of existing procurement tools focused on decision support and information management. Cloud capabilities typically result in quick implementations with limited or no IT involvement. Rapidly deployable in a cloud environment or behind a firewall, the approach has empowered the procurement community in a range of ways including ease-of-use and general front-line business user accessibility; permitting experienced sourcing experts as well as more traditional “buyers” to walk up to a tool set and be productive with little or no training. As a result, procurement teams can get up and running quickly with the solution to start generating savings.

NEW! Services Procurement Benchmarking – Truth in Numbers to Achieve a New Level of Program Results


Benchmarks and KPIs have become an integral part of successful contingent workforce management initiatives and now, SOW programs. As procurement organizations become more sophisticated in managing services spend, many are quickly learning about the benefits of looking at overall quality and the total cost of ownership of a given relationship on top of the hourly costs of individual contingent workers. This move has come as leading-edge companies are pushing to answer “why” as much as “what” or “how much” when it comes to both vendor (e.g., rate compliance, response time, etc.) and internal performance. Moreover, effectively managing procurement-led KPIs and benchmarking is becoming a stepping-stone to incorporate organizational inputs from HR, finance and other areas of the business.

NEW! A Statement of Work (SOW) Backdrop – The Foundation of a Business Case


Spend Matters and Fieldglass have observed a significant ramping up of many contingent workforce and services procurement programs within Global 2000 organizations over the past few years. For companies serious about general procurement programs and enablement through technology, the additional investment in a VMS (vendor management system) to tackle contingent spending is a logical extension to core capabilities in the indirect purchase-to-pay arena. It also enables additional spend analysis, e-sourcing, contract management and supplier management capabilities. Yet few organizations making a concerted effort to pursue contingent spending have made a similar investment in their statement of work (SOW) initiatives, at least to date. This is unfortunate, as the capabilities enabling SOW control, compliance, and negotiated and implemented savings often differ from VMS automation platforms that only support contingent labor spend today.

NEW! GPOs and Buying Consortiums Must Be on the Radar for 2011-2012


Purchasing consortiums are rapidly establishing themselves as a vital link in today’s world-class supply chain strategies, used as a powerful tool to significantly drive down costs by supply chain managers in the most effectively run procurement organizations in corporate America. To find out why, Spend Matters, in conjunction with Allianza Partners, has researched the top 10 consortiums in the US. Though the common belief is that smaller businesses benefit most from consortiums, our research shows that very few people are aware of a powerful fact: 15-20% of the Fortune 1000 currently use buying consortiums! And 85% of the time, they’re seeing 10%+ of real savings! Download this Spend Matters Perspective today to find out why.

NEW! Developing and Maintaining Accurate Supplier Data: Lessons from Personal Hygiene to Overcome Dirty Supplier Information in Finance and Procurement


Today, many finance, operations and procurement organizations have directed sourcing and supply chain activities toward finding the right product at the right price delivered at the right time — while overlooking the impact of less tangible vendor issues, or even merely assuming that these will be dealt with by someone else in the organization. Undoubtedly, spend analysis and aggregation of vendors across business units, managing parent-child links, etc., is important. But such activities only solve a small fraction of the overall data quality mess.

NEW! Analyzing the Rise of Procurement Staff Augmentation Services: 2011 Update


At Spend Matters, we track many aspects of the procurement and operations world. And in most of the areas we analyze, it’s possible to see an evolutionary approach to the market adoption of new types of products and services. But procurement staff augmentation services are different. In what feels like a compressed period of time, procurement staff augmentation has exploded into an entirely new market niche that was barely on the radar screen before its ascent. And since the publication of this original paper in 2008, the increase in adoption of staff augmentation services within procurement groups has continued to boom. In reviewing this original paper from 2008, much of what we said at the time – which is largely intact in the text, albeit with a number of additions – has proved accurate and we hope helpful as companies explore staff augmentation options. As we looked to update this material for 2011, what has changed the most in our observation is the introduction of a more mature marketplace of both decision makers and providers.

NEW! Spend Analysis – Making Quantum Leaps: Exploring the Realm of Possibility and Savings with Three New Strategies


Over time – sometimes over very short periods – technology markets trend toward a combination of consolidation, sameness and then, eventual and sometimes radical evolution. Yet enterprise software and BI is often far more staid – with life spans measured in human rather than dog years (or even insect years). However, a radical evolution is afoot in spend analysis at the moment. It’s not just the advent of next generation platforms, nor is it about technology for technology’s sake; rather, it’s a new understanding of what the right set of tools can enable business users and analysts to accomplish. This Perspective ends by suggesting nine actionable items that companies can put to use to take advantage of the latest that spend analysis approaches can offer. Whether you’re new to spend analysis or are looking to hit the hyper-drive switch to vastly accelerate the benefits of existing programs, this analysis will prove invaluable.

A Personal Lesson: Reaching the Limits of Reverse Auctions and Strategic Sourcing: When Collaborative and Quantitative Approaches Would Have Delivered More


This Spend Matters and MetalMiner Perspective provides a first person account of how legacy e-sourcing approaches (and reverse auctions in particular) can come up short when it comes to navigating the waters of more complex categories and larger sourcing events. Written in first person and in a straightforward manner, the informality of the white paper masks the complicated nature of the arguments and instructive lessons it makes. Included are examples of specifically how optimization and advanced sourcing can change the strategic sourcing process as well as lessons learned from the advent of new approaches to creating markets and events using the latest in data gathering and analysis techniques. The Perspective also includes a case study in the market for sourcing tin cans.

SAP SRM 7.0 – The Wait’s Over, But Is It Worth It?


SAP SRM 7.0 is most certainly the most anticipated procurement application that any ERP provider has released in a long time. But how does SRM 7.0 actually compare with earlier versions let alone the competition? And what are the costs, options and trade-offs for different deployment models? This Spend Matters Perspective provides background, context and analysis to help companies better understand all of the options available to them with SAP SRM 7.0 and to make the best possible decision based on their requirements.

Beyond Requisitioning: Getting Past the Downstream Limitations of ERP Procurement Applications


ERP procurement applications have come a long way in recent years. But nearly all still leave tremendous opportunity on the table when it comes to opportunities that advanced downstream payables and invoice automation can enable. This Spend Matters Perspective examines how companies can leverage their existing or planned ERP procurement investments by taking advantage of new savings and working capital management solutions that unite the objectives of procurement and finance organizations.

Using Sourcing Intelligence to Combat Commodity Volatility – The Price Index Advantage


Commodity price volatility is on everyone’s mind. At a rate in some cases at nearly fifty times the pace at which many markets rose in recent years, nearly all commodities came crashing back to earth in a matter of weeks in recent months. But how can companies best take advantage of riding the markets down while reducing exposure and risk in rising markets? This Spend Matters Perspective examines how global pricing indexes can become a critical tool in every direct materials sourcing arsenal.

What is Your Best Option? Procurement Certification and Training Today


Everyone from executives to analysts will admit that there’s a large skills gap in procurement and operations organizations today. But in a challenging economic environment, what’s the best way to address it? Few organizations can afford to add new resources. The answer: training, certification and distance learning options that associations, universities and consultancies can provide. This Spend Matters Perspective analyzes and evaluates many of the available options, including ISM’s new CPSM certification.

Redefining Sustainability: Saving Money, Reducing Risk and Going Green


The word sustainability all too often conjures up sourcing and supply chain tactics that add cost and complexity. But this does not have to be the case. Industry leaders have begun to reduce costs by embracing sustainable approaches to sourcing and supply chain management. They’ve also expanded the definition of sustainability to include practices and processes that help reduce supply risk. Learn how sustainability can help your organization to save money, improve supplier relationships and lower risk by reading this Spend Matters Perspective.