Procurement News from the US — Weekly Round-Up

Do you feel like coming to Chicago on March 19-20, 2012? We're putting on our next conference, Commodity Edge: Sourcing Intelligence for the New Normal. It's a business-to-business commodity risk event, featuring:

  • Key manufacturing category and macroeconomic outlooks
  • Tactical raw material sourcing strategies
  • Legislative overview of federal and state policies that will impact global sourcing organizations
  • Best technologies, tools, and strategies to manage volatile commodity spend

More information and official registration will be announced in a few weeks, but save the date!

Moving on...lots of Ariba news this week (Part 2 of this post will run on Monday):

Ariba StartSourcing: Just How Good is Free? (Part 1) -- Earlier this week, Ariba unveiled their latest trick designed to drive sourcing marketplace volume to suppliers to generate supplier-paid fees -- Ariba's increasing, high-margin source of revenue. The announcement is Ariba's decision to make StartSourcing free, at least if you accept a number of caveats. According to the announcement, Ariba stated that "StartSourcing(TM) is now available at no cost." It also comes as no surprise that Ariba Discovery is included, allowing access to a "global community of over 700,000 selling organizations." Curiously, we have heard rumblings that Ariba may have scaled back its Discovery efforts internally, at least staffing wise, but this is unconfirmed. Still, regardless of internal growth initiatives for Discovery, this smaller footnote in the press release is undoubtedly one of the primary reasons that Ariba is making this offer free. But what do organizations get with StartSourcing, and how does it stack up?

Ariba's 180 on Consultancy Partnering -- But Past Scorched Earth Policies Have a Long Memory -- We've had several calls and meetings this year with sourcing and supply chain consultancies that fall under the larger strategy/operations and Big 5 type firms that used to partner with Ariba in the past. These organizations have been keen to understand if the overtures that Ariba is making to them are for real (i.e., that Ariba is actually keen to refer business in exchange for a relative low-cost quid-pro-quo in licensing and using Ariba technology). In a recent press release highlighting their progress at bringing boutique sourcing and operations firms like Transpac Access (run by two former FreeMarkets executives), Paladin Associates and Archstone (now Hackett) into the partner fold, Ariba touted success stories from the consultative trenches. But how much of it is Spend Management hot air vs. a true retrenchment and change in partnering strategy?

The end of the year seems to prompt a lot of predictions:

Spend Matters Procurement Predictions: Five Scenarios For the Next Decade (Part 1) -- A few weeks back, I found myself with less than 24 hours to the Spend Matters UK/Europe first anniversary celebration without having prepared the "predictions" speech that Peter Smith had asked me to present. The idea was that attendees would gain something of substance that they could take back with them -- besides ringing eardrums from all the rock music -- from our little party. Fighting a combination of jetlag, late-night curry and the combined effects of good Bordeaux, Vintage Port and warm beer we had quaffed the previous day, I set out to put pen to paper to come up with five scenarios for procurement in 2020 on a short train ride into London. I wanted to describe five different worlds that were not necessarily mutually exclusive, bad or good -- just different from today, and logical extensions of where we might be headed as a function based on different happenings in the world and in our companies and organizations. (Part 2 here)

A global perspective on e-invoicing:

E-Invoicing In Latin America, Mexico and Beyond: Following Europe’s Compliance Footsteps (Part 1) -- The adoption of electronic invoicing and broader P2P programs varies widely between North American and Europe. In a recent Spend Matters Compass paper, E-Invoicing Comes of Age -- Discovering What's Possible From the Latest Electronic Invoicing/ Invoice Automation Capabilities, we highlight some of the reasons why adoption is different across different regions. As an example, "throughout a number of countries in the EU, VAT compliance, collection and reporting has become a central part of the value proposition in electronic invoicing environments and has helped drive aggressive adoption of such programs, especially in the Nordic countries...the majority of organizations in these [geographic] markets have better developed electronic invoicing and invoice automation programs than they do requisition-based search, shopping, approval and buying systems on the transactional procurement side. This is in marked contrast to the US market, where eProcurement adoption dominates relative to electronic invoicing penetration."

SMACK DOWN!!

Negotiating With SAP -- Weighing Different Advice on Tactics for Q4 Smack Downs (Part 1) -- Earlier this month, Forrester's Duncan Jones published a detailed SAP sourcing op/ed in the form of a research brief titled Three Key tips to Optimizing your Commercial Relationship With SAP -- Encourage SAP to Adapt to Current Licensing trends Forrester subscribers can access the research here. Even though we're not SAP (or even more broadly speaking IT negotiation and sourcing experts) here at Spend Matters, the topic is worth discussing given the substantial percentage of readers it affects. Duncan frames his argument, saying "many sourcing and vendor management professionals are currently facing tough negotiations with SAP, which does over 40% of its license business in the fourth quarter." He then frames the challenge that companies face in preventing rising maintenance costs while budgets and value delivery decrease, achieving an appropriate price level on license purchases and resisting unreasonable non-compliance claims. All in all, Duncan's work represents an opinionated primer on a topic that certainly goes past SAP in much of its general advice. (Part 2 here)

And a bit of fun from Forbes:

Santa's Supply Chain: Best in the World? Gartner likes to publish the Top 25 Supply Chains every year. Unfortunately, there’s one supply chain the esteemed analyst firm continues to overlook. And it just so happens to be the greatest supply chain success story of all time. I’m talking about The Santa Claus Supply Chain. Don’t believe me? Who else can claim:

  • A laser focus on the target market – Children of all ages
  • 100% perfect order rating, on-time delivery and fill rates
  • A global distribution channel that spans the world in 24 hours
  • Direct Door to Chimney Delivery Model
  • A committed workforce with zero turnover
  • The very first known supply chain to run “in the cloud”

- Sheena Moore

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