Best Practice Content

Spend Matters welcomes this guest post by Amanda Prochaska, the president of High Performance Procurement. Part 1 of this two-part guest series appeared yesterday and was written by Charlotte de Brabandt, a member of the Institute for Supply Management’s Thought Leadership Council.

For years, procurement’s role has been to reduce costs, or at least this is how it has been seen by others.

Procurement has always been a value provider, not just a cost-cutter. It is unfortunate that in the past it has been looked at so negatively, with such a narrow view. Perhaps this was because the procurement environment was heavily focused on negotiating prices. It did not focus so much on people or assets. The bottom line was always price and value.

However nowadays, most of the low hanging fruit where an easy monetary negotiation could be made is gone. And procurement is moving more toward being known as the value providers.

Part of making the transition to value providers is to change the brand of procurement. Learning from those who do this well, here are nine tips that marketers use to create a strong brand.

Spend Matters welcomes this two-part guest series by Charlotte de Brabandt, a member of the Institute for Supply Management’s Thought Leadership Council, and by Amanda Prochaska, the president of High Performance Procurement, whose article will appear tomorrow.

Procurement professionals are not typically known for their ability to be great marketers. However, having a strong brand ensures procurement is at the very center of any business strategy. Look at any of the world's great brands and you will see that they all use their brand strength to gain attention. Strong brands are simply the key to creating value, and when this is done well, the full potential of procurement is realized.

Unfortunately, procurement’s brand has been largely left to their customers to define. These include definitions like “those are the people who negotiate contracts,” or “they buy stuff,” or “they are slow and non-responsive.”

As procurement professionals, we understand we deliver much more value than how we are being defined. So, what does it take to proactively define the value of procurement? Let's look at six tips:

Closing the payment gap – not just the invoicing gap – remains a Holy Grail for procurement organizations looking for greater oversight and control in transactional purchasing and even supplier relationship management. It’s also a means to bring finance and procurement organizations closer together – and to prove that finance is really procurement’s ally in the struggle to wrestle the maximum amount of utility out of P2P programs together, rather than separately. As my colleague Pierre Mitchell has noted, “any land grab is usually about job security built upon the pillar of bureaucracy.” In other words, finance and procurement must really be in the payables thing together.

The 10 reasons for procurement to work with finance departments are:

1. The value of control and oversight of the end-to-end transaction with suppliers
2. Building greater invoice/transaction insight that can bridge the visibility gap in getting line-level detail to supplier invoices without having to request information from suppliers
3. Being able to quantify efficiency driven metrics through a Trojan Horse adoption approach to e-invoicing
4. Reducing supplier risk
5. Capturing savings/leakage through closing the transaction, invoice and payment loop
6. Not getting taken advantage of by vendors that hide the total cost of P2P implementations by masking the amount suppliers are charged
7. Flexibility on supplier engagement/fee assumption in the case of supplier network models
8. New securitization/capitalization opportunities (e.g., securitizing the discount of forward payables through converting the discount classification to revenue)
9. Effectively addressing payables also forces addressing the “payment clock” question as early as possible to capitalize on opportunities.
10. Create powerful “information exhaust” around the optimal means of engaging with suppliers on a total cost basis – beyond just reducing risk. This not only includes capturing additional discount opportunities through payment integration, but also understanding how and when suppliers (and different groups of suppliers) are taking advantage of different payables opportunities.

Four years ago, during the last big M&A frenzy, I published a post on my Sourcing Innovation blog on The First 4 Questions to Ask During Any Mega-Acquisition that is still just as relevant today as it was four years ago.

And while it was very direct and maybe even a bit confrontational, sometimes it’s a good idea to be direct because sometimes you need to let the new vendor know you’re not in the mood for any shenanigans. The reality is that while some mergers and acquisitions are with the intent of creating a better combined company that can better serve the respective customer bases, not all mergers and acquisitions are done for this reason. Some are done just to eliminate competition, and others are arranged by investors for the sole purpose of a short-term money grab (which will be accomplished by a short-term PE sale or initial public offering once the balance sheets are puffed up and the overhead reduced).

So, without further ado, let's get to the four questions you should ask to find out whether you and your new vendor are on the same page.

After a Spend Matters' team went to the ISM 2019 conference last week in Houston, I recapped the event in an earlier post, but today I want to focus on two more sessions, one titled "Procurement Hacks" and the other about sustainability, given by HP Enterprise. And I have a special shoutout for Katie Smith, who discussed a procurement digital transformation case study for HERE Technologies.

Government contracting is known as a detail-oriented process that relies on plans and procedures, but Public Spend Forum is offering tips to help companies with procurement problems so they can improve the process where they can. And that involves changing your mindset, being flexible and ensuring that you have talented people. The tips come from the agile model for addressing the constant change associated with modern business, and Public Spend Forum, a sister site of ours, explains how these principles can relate to procurement practices.

I’ve called this meeting about government contracts with you, the reader, to check in with Public Spend Forum, a sister site of our, to see what’s going on in public procurement. PSF has a list of tips and advice on something that seems simple but is widely derided: having a meeting. Meetings can be successful if you know what you’re trying to accomplish. And that takes knowing the different types of gatherings that acquisition pros might attend in a week — customer meetings, informal meetings with prospective contractors, formal meetings with suppliers and contractors, negotiations, source selection meetings, post-award contract kickoff meeting, and contract closeout meetings.

It’s time to check in with Public Spend Forum, a sister site, to see what’s happening in public procurement. This week, we’ll focus on an article that offers some in-depth tips on four value levers for public spend. PSF offers a simple list — and then a lot of detail about each item. Click above for the highlights.

Editor's note: This is a refresh of our 2015 series on running a successful P2P implementation, which originally ran on Spend Matters PRO. Read Part 1 here.

In the Spend Matters webinar “Nightmare on Procurement Street,” we discuss how to successfully implement a procure-to-pay solution (P2P) and avoid the process from turning into a terrible experience. This 2-part Spend Matters Plus series lays out what tips we suggested for procurement organizations embarking on a P2P project. This is not meant to be an all-inclusive, step-by-step implementation guide, however. We simply want to share our best practice ideas based on our experience and our discussion in the webinar. Today, we will focus specifically on project management as a procurement responsibility, as well as ensuring finance and accounts payable (A/P) are included in the P2P implementation project. Other areas we will cover are remembering the importance of supplier integration, system testing and user training in the P2P process.

While cyberattacks have taken place in a variety of forms since the 1990s, the threat has become more palpable and acute in the past decade with businesses increasingly relying on networked systems and the internet of things (IoT), especially in the logistics and supply chain space. In a recent survey conducted by the American cybersecurity technology company Crowdstrike, 66% of IT decision makers said their companies had suffered a supply chain cyberattack in the past 12 months, bringing to light a threat that many considered an abstract concept. Whether the risk stems from a virus, internal bug or insider threat from within one’s organization, the effects on production line, distribution network, shipping, supplier communication or even residual risks left over from a terminated vendor relationship, pose considerable danger to firms and beyond. Moreover, the scope with which cyberevents must be observed and mitigated require an ever-more invested and communicative approach to ensure that when the inevitable does occur, all parts of one’s supply chain can effectively work together to defend and keep operations on track. Check out five recommendations to get you prepared.

In too many cases, system integration (SI) and consultancy partnering decisions take a back seat to technology selection and related business process considerations when in fact all three areas are important to consider in equal measures as parts of source-to-pay and procure-to-pay deployments. This misstep is often one of the root causes of procurement organization dissatisfaction with technology decisions and adoption.

In this PRO brief, Jenny Draper, Spend Matters’ managing director for UK/Europe, shares her experience and best practices on the topic from serving as a procurement consultant over two decades before recently joining Spend Matters.

This best practice essay includes Jenny’s lessons learned on the importance of systems integration partners and how to set them up for success (and get the most out of a relationship). It covers such topics as when (and why) superior technologies fail, change management missteps, the role of the modern SI and finding the right fit partner. She then explores specific lessons learned from Determine’s boutique partner ecosystem in Europe.

Throughout, the brief also includes key takeaways and summary recommendations for procurement organizations going through procurement technology selections and deployments.

Many of the most effective ways to curb maverick spend — like using e-procurement tools with approved supplier catalogs or better contract management tools integrated into the buying process — still have not been implemented by more than half of most organizations, a survey by The Hackett Group found. And it found that perceptions of the causes and solutions for maverick spend can vary depending on a worker’s role.

Procure-to-pay technology provider Basware used the research for its study, “Perception and Reality: A Report on Maverick Spend,” which examined the practice of making purchases outside the compliant procurement process. Maverick spending can take many forms, including purchases made outside a preferred channel or supplier, or those that do not follow contract terms and miss out on negotiated savings. Some of the rogue purchases happen because employees or their managers consider the transaction to be too small to matter.