Crowdsourcing – finding urgent procurement savings

You've probably heard of the "crowdsourcing" concept - the idea that groups of people (and they don't all have to be deep subject matter experts), can make better decisions and provide more useful input or ideas than "experts".

A friend of mine suggested we should try that here, as a variant on our previous "question of the week" feature. We'll pose a question, ask for responses, then maybe go through an iteration around the solutions proposed. The same friend also suggested the question, which is this -

"What are the best ideas for delivering rapid procurement savings, within the current financial year, in an organisation where basic aggregation and category management has been done already"?

So we're looking for very immediate ideas, not longer term strategic type stuff. This is the "emergency" situation where the CEO says "we need savings NOW"! Many of us will have been through that - I know I have.

Anyway, let's see what ideas are out there... comments please!

Voices (8)

  1. Ian Heptinstall:

    Sorry about the typo – for “companies” read “company’s”

    IH

  2. Ian Heptinstall:

    Be careful. The companies goal is not to reduce costs, but to maximise profit.

    Assuming you are not risking impacting on your customers & your offerings, then “demand management” can be done quickly. However, if you have done good CatMan, then there shouldnt be much scope from the managed categories unless there is a big change in the business’s strategy, or reduced specs. If an edict from the CEO results in reduced prices I would think about changing your category mangers.

    Check-out the actual effectivness of your own, and your suppliers’ activities. See the article below on how some smart folks were brought in by BP when they had a minor incident in the Gulf of Mexico, and they helped BP’s suppliers get much more through their factories. One increased production by 4 fold in a few days – assuming fixed costs were 50%, this equates to a unit cost reduction of 37%. Having spoken to the guy who lead the project, the key was to focus on increasing throughput……unit cost plumetted, but as a consequence, not as a main driver.

    Link: http://www.industryweek.com/articles/theory_of_constraints_tapped_to_accelerate_bps_gulf_of_mexico_cleanup_24152.aspx?SectionID=1

  3. Gordon Murray:

    To me this is the essence of strategic commissioning in the public sector, viz the community, third sector and private sector articulating outcomes, agreeing strategic priorites (and what isn’t a priority), then procuring for outcomes. This enables the market to come up with innovative and cost reducing solutions. Finally, the in reviewing effectivenss of acheving the outcomes (not contract management) crowd sourcing should also be used.

  4. Ben McKee:

    Star chamber for spend – make all budget owners come to a cross-business group and make a one-page presentation of spend. If the business doesn’t see the value – don’t spend it…

  5. Dan:

    Threaten to sack the 5% of employees who waste the most money. You’ll either spend less or save on wages

  6. Dan2:

    Cut the budgets for the business areas and call it demand management.

  7. Toni:

    Maybe carry an inventory of what is in stock, surprising what you find you did not know you had… And use that as a priority before reordering anything.
    Should be quite quick and efficient.

    Alternatively use some Toyota operations model. Get a quick round-up of what is really needed to run the services, get rid of most of the stocks and any storage facilities for it, should save a bit.
    Get the suppliers to do the jobs / deliver just in time kind of things.

    What would you do if you needed to save a lot of money tomorrow? Stop eating at the restaurant and bring your lunchbox from home, eat pasta and potatoes instead of houmous and passion fruit.
    A similar thing for procurement could be envisaged: give more responsibility to the city workers instead of giving everything out to private contractors, delay non essential works.

    As a private person another way to get money into the system quickly into ask the bank for a loan. Not a great thing to do as you need to repay this borrowing at some point but in the medium term getting somebody else to pay for some of your work can save a lot of money and help you deliver some of your activities – or similar kind of activities. Here I am thinking of getting into EU funded projects which can help co-finance some of the activities. This can reduces the wage bill by half and pay for some of the procurement processes?!

    I have been reading too much Operations Management books lately…

  8. bitter and twisted:

    Tell the CEO to **** off. That will save at least one wage.

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