Procurement Metrics - Premium Content

“The Tragedy of the [Un]Commons” with Procurement Master Data (Part 1) [Plus +]

In case you slept through or missed Economics 101, an externality occurs when a common resource (e.g. air, water, parks) that is of use to many, but does not have a direct user feedback mechanism (e.g. user fee, penalty, even reward) when the resource gets abused, or improved. It can be a positive externality (vaccinations keep diseases for spreading in a society, keeping your house in good condition helps neighbors’ property values) or a negative externality such as pollution – perhaps the most common example. The shared resources that get used and abused are also called commons – an originally English concept referring to those parts of a lord’s property that tenants, aka ‘commoners’, had access to. In the corporate procurement world, supplier data (as well as product, customer and other broadly used data sources) is one of those common resources that can benefit all, but can easily be polluted or destroyed by a few individuals, typically without any consequences. Conversely, those working to keep their data clean often go unrewarded. In other words, it’s a tragedy of the commons – or a ‘negative externality’ in modern Econ-speak.

Putting GRC, Innovation, and Profit Improvement in Procurement Terms [Plus +]

We’ve spent a fair amount of time digging into a fascinating Proxima and FTI Consulting study, Corporate Virtualization – A global study of cost externalization and its implications on profitability. This is the final post in this series, and it shares key takeaways in the report focused on governance risk and compliance and profit improvement. Read on for Spend Matters’ own interpretation of the results and recommendations.

Working With Procurement and Operations Consultants: Delivery, Measurement & Performance [PRO]

As we continue this analysis in the wake of the PwC and Booz combination, we’ll transition our attention to project delivery, measurement/performance, and due diligence. One recommendation which we explore in this area includes holding firms accountable based on a scorecard but not just any scorecard. Pick one that is not generic to consultancy work, instead, it should be specific to the type of work they’re doing. This may include using non-price factors and conducting an overall value scoring approach to measure the overall effectiveness, value, and cost of a given engagement. Such an effort may also include using granular performance outcomes to measure consultant performance -- which we explore in detail in this Spend Matters PRO analysis.

Working With Procurement Consultants: Sourcing, Implementation & Getting the “A” Team [PRO]

PWC’s recent announcement of its intent to acquire Booz and Co (see our coverage here and here) got us thinking about how significant a disconnect there is between those on the inside of the consulting world (including former consulting geeks like us) and those who tend to buy services, especially in the operations and procurement areas – and most important, how that disconnect prevents companies from getting the best value from the firms they partner with. Even those who run P&Ls or companies that also used to work for consulting firms after their MBAs are often too detached on the tactical level from what it takes to get the most out of a team (unless they’ve developed a truly stellar relationship with a partner whom has got their back on multiple levels – but more on this in a minute). Today, we’ll share some secrets of the trade in getting the most from working with procurement and operations consultants.

A Procurement Transformation Cookbook: Part 1 – Creating the Value Menu [Plus +]

The intent of this series is to provide a cookbook of sorts around some basic counsel on procurement transformation. It is by no means a replacement for the high-impact and high-IP value that many procurement services bring as accelerants to a procurement transformation. We'll frame the piece as a series of questions. There’s even a chance we might put this into a flowchart someday (resulting in some truly impressive home décor, perhaps?). Anyway, here are some initial diagnostic questions to ask as you look to run and transform procurement.

MRO Sourcing: Forget Negotiations, Start With Good Visibility and Data [Plus +]

Technology can play a critical role in helping procurement organizations better manage MRO spend and create implementable savings programs with additional benefits (e.g., supplier rationalization). But companies shouldn’t start with sourcing or eProcurement tools – or even clever supplier technologies to manage demand (e.g., Grainger kiosks). You should start with spend analytics – but not just any old generic spend visibility program applied to MRO will do.

Oracle: Making Sourcing Better Through Analytics [Plus +]

Earlier today, I sat in on a presentation at Oracle OpenWorld highlighting a number of improvements that Oracle has made to its core business intelligence capabilities in the procurement area – ranging from data acquisition to classification to visualization. But the most important elements of what Oracle has been up to around BI and procurement analytics are not centered on what’s in the traditional spend analytics sandbox. Rather, it’s how Oracle’s analytical and BI tools are working to improve the utility of other procurement applications, including Oracle E-Business Suite Sourcing.

Dissecting Spend Analysis: Pricing Variables and Cost [Plus +]

So far in this Spend Matters Plus series, we’ve considered what spend analysis is (and what it's not) and provided a segmentation of current market offerings and approaches. Today, we'll turn our attention to current pricing models and explore what’s next for spend analysis.

Spend Analysis: Observations on a Fast-Evolving Market [Plus +]

It can be very difficult for companies currently evaluating spend analysis solutions to directly compare providers. The offerings are just so different. Our advice to potential users is to divide the landscape into a handful of potential buckets and evaluate the classes of tools that make the most sense for individual needs (and that could be multiple tools within one organization to address different needs). We’ll share our suggested segmentation in the next installment in this series. But today, we'll dive into exactly what spend analysis is...and isn't.

Procurement and Supply Analytics: Spend Analysis is Only the Beginning [Plus +]

Yesterday, Pierre Mitchell gave an Ask the Expert webinar that a) covered a stunning amount of material in only 37 minutes with some truly skillful PowerPoint work; and b) gave several compelling reasons for procurement to look beyond just "spend analysis" and delve into the much deeper world of supply analytics and intelligence. The webinar is a must-see for anyone working in supply risk, supplier information management, and supplier relationship management. Slides from the event and the recording are after the jump for Plus and PRO members.

Ask the Expert: What’s Possible with Procurement and Supply Analytics? [Plus +]

Our next Ask the Expert webinar for Plus and PRO members is this Thursday, 8/22, from 10-10:30am Central. This week we feature Pierre Mitchell, Spend Matters Chief Research Officer speaking on Analytics in Procurement and Supply - The Art of the Possible. He’ll tackle questions such as: What is supply analytics, and how does it differ from spend analytics? What is the opportunity in supply analytics? How do different types of technologies and vendors address the problem? Spend Matters PRO/Plus members, click on through to register.

Supply Performance Management: Critical For Procurement Measurement [PRO]

In the last post of this series, we introduced the concept of Supply Performance Management (SPM). This “Big SPM” (as compared to the “Small SPM” acronym for Supplier Performance Management) is basically about extending the concept of Enterprise Performance Management (EPM) to the supply base. One of the key concepts of Supply Performance Management is that procurement organizations must derive their value from improving supply performance on a balanced scorecard of supply rather than just measuring themselves on traditional purchasing metrics for purchase price reduction. Procurement should gauge its performance for how well it helps stakeholders move the needle on their supply performance metrics such as cost, delivery, innovation, risk mitigation, etc. and the impact it has on the metrics on their scorecards. Procurement becomes a champion for performance improvement of a balanced scorecard of supply rather then the siloed owner of purchased cost reductions.