Direct Materials Procurement and Risk Content

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.

Developing Strategy: Your Supply Risk Management 2016 Game Plan (Part 2) [Plus+]

supply risk

We continue our outlook on how to manage supply risk in 2016 by paraphrasing the adage that advises folks to think globally and act locally, and breaking it down for procurement practitioners. We began our first post in this four-part Spend Matters Plus series with a definition of the major categories of risk that an average organization is exposed to and noted how omnipresent and expensive risk is. In this installment, we dive into a risk management strategy based on global thinking and local implementation before moving on to cover risk and reward alignment as a key to adoption and a discussion of how to monitor and manage your risk management program for success in the remainder of this series.

Which Factors Do Not Define a Complex Sourcing Process?

complex sourcing

Before diving into what defines a complex sourcing process or initiative, it is instructive to consider what does not. That helps illustrate the issues and clears up some of the confusion that is often seen around sourcing exercises. While there are several critical factors that may make a sourcing process seem complex, few of them are enough to drive true sourcing complexity as Peter Smith defines it in his paper, What defines complex sourcing – and why does it matter?

The Importance of Respecting Complexity in Procurement

supplier network

In the white paper, What defines complex sourcing – and why does it matter?, my colleague Peter Smith makes a number of convincing arguments about why procurement professionals and consultants should take a hard look at complexity as an overall driver of sourcing and supply management strategy, opportunity and engagement. But to ultimately embrace complexity, we must first understand it.

How to Start a Global Supply Chain Risk Management Program (Part 2)

Yesterday, we shared the first 5 of our 10 tips for getting started with a global supply chain risk management (SCRM) program. This post, based on content from a Spend Matters paper by Thomas Kase, vice president of research at Spend Matters, looks at our final recommendations. We invite all of our readers to download this analysis and our PRO subscribers to speak with our team about how to build their business case for SCRM program investment.

Our final tips for getting started with global SCRM programs include considering interoperability and integration, obtaining c-level sponsorship and tying in HR. Organizations that want an inside track on building or accelerating a business case for investment in SCRM are likely to find the Spend Matters paper, A Case Study in Global Supply Chain Risk Management: How AGCO Implemented an SCRM Solution to Save Millions, useful in their efforts.

Supply Risk Management 2015 (Part 2): Best Practices [PRO]

As our examination of supply risk management best practices for 2015 continues, we turn our attention to measuring supply risk scoring in business terms, incorporating variation and volatility into risk models (beyond just structural complexity), showing risk graphically and fully considering supply risk management as an embedded process. This 3-part Spend Matters PRO brief, authored by Chief Research Officer Pierre Mitchell, provides an outlook on how best to manage supply risk programs in 2015. The lessons he presents are based on his experience working with and learning from best practice procurement and supply chain organizations – and academics in the field.

Supply Risk Management 2015: Lessons from Leaders [PRO]

Supply risk is not a new topic, nor will it be going away anytime soon. But, it's no time to be complacent. In this 3-part Spend Matters PRO research brief, Spend Matters Chief Research Officer Pierre Mitchell provides his outlook on how best to manage supply risk programs in 2015, based on lessons from leaders. We begin today with how to think globally and implement locally, aligning risk and reward and how to create and track the right set of metrics and benchmarks.