IT and telecommunications outages; cyber attacks; and loss of skilled employees are the top three causes of supply chain disruption, according to the Business Continuity Institute (BCI)’s ninth annual Supply Chain Resilience Report, released this month in partnership with Zurich Insurance Group. Although these three causes of disruption are expected to remain highly relevant in the next 12 months, companies should also keep an eye on new laws or regulations, which are expected to act as a source of disruption in the next five years.
Centralization of sourcing operations and overall spend has literally been at the center of debate in a number of ways for procurement practitioners.
A few months ago, our editor at large Sydney Lazarus answered a reader’s question on the very topic. In her reporting on whether centralizing or decentralizing sourcing structures of procurement organizations is the way to go, she wrote that “company size, location, expansion rate, purchasing category and industry are all factors that affect whether a more centralized or more decentralized structure is better.”
Several of those factors played into two case studies from BuyerQuest focusing on how a large quick-service restaurant corporation and a CPG organization used e-procurement technology to confront their centralization challenges.
Today’s enterprises can no longer rely only on traditional intermediaries for sourcing and engaging talent. This is especially the case when it comes to the specialized, often scarce skills of high-end knowledge workers. At the same time, businesses need low-friction, low-overhead, end-to-end and often project-specific processes that can support speed, flexibility and agility — often enabled by emerging technologies. Technology, however, is just one part of the puzzle. At least as important — if not more so — is initiating and sustaining change inside the enterprise. Adopting new talent models is not about making incremental improvements to your existing approaches, much less disrupting them entirely. Instead, it’s about ushering a new and potentially transformative innovation into the enterprise.
In our previous article, we posted a question to services procurement practitioners: Is it time for “SOW Lite”? Simply put, businesses do not currently have the tools they need to take advantage of the badly needed talent available that the gig economy, freelancers, independent professionals and small, specialized service providers offer. The concept of SOW Lite proposes a lifecycle process that “runs from sourcing, through contracting, on-boarding, project management, and all the way to invoicing and payment.” To help take this concept from question to practice, I reached out to Michael Matherly, CEO of Sourcing for Services LLC, to continue the discussion on the next stage for SOW and how technology providers could support the area.
As a senior economist and risk expert at Coupa, Ahmad Sadeddin is in a good position to see what companies do well and not so well in terms of risk management. Unfortunately, companies are being put to the test more frequently these days, as risks become more numerous and unpredictable. In this second half of our pre-webinar interview with Sadeddin, the risk expert discusses common risk-related misconceptions, challenges that Coupa’s clients have faced and one recent risk success story that impressed him.
Are companies paying more attention to risk as they become more sophisticated, or are risks so numerous nowadays that risk management has become a bigger priority? If news headlines are any indication, we are all in need of a few contingency plans. And if you — as a business or as an individual — don’t even know where to start, well, you’re not alone. From hurricanes and earthquakes to Brexit and the upcoming General Data Protection Regulation (GDPR), what is one supposed to look at first?
We recently put up an interactive Ask Spend Matters box so that you, our readers, can tell us about the topics you want us to investigate. One of the first questions that came in was about tail spend: “What is the cost of having a long supply tail, and how are organizations determining the ‘right’ supply base (number and percentage) as relates to spend?” As Spend Matters Chief Research Officer Pierre Mitchell put it, "This is a great question, but it’s a bit tricky to answer.” Read on to hear his reply!
Editor’s note: This is the final post in a three-part series on digital disruption from a procurement professional’s perspective. Also check out Part 1 and Part 2.
Unintended consequences are mostly thought of negatively, but sometimes unexpected things open the door of opportunity. When you undertake a digital project, you often are dealing with the new and untried — and the chance of some pleasant unintended consequences. That’s when things get fun.
Tail spend is a thorny problem — and an important one.
Tail spend is an amalgam of more granular spending: one time, low dollar, maverick, tactical by design. It doesn't even have a common definition understood by all, and it is generally a mess.
So, how to solve this problem? The design ideal is the concept of guided buying, where you start with the end customers (i.e., employees who need something) at the time of need and then guide them down to get what they need to accomplish their goals (but also within corporate policy). It’s an entryway to all procurement, not just the procure-to-pay (P2P), process, so you need to get it right and make the experience count.
But, who is the guide? Is it a tactical buying group in shared services or outsourced provider? Or is it a technology solution? Let’s discuss.
In a previous post, I discussed the three critical focus areas that are foundational to procurement excellence: customer/stakeholder focus, performance and transformation. They seem straightforward, and indeed they are. Unfortunately, it's hard to get them all at the same time, and get them aligned.
It’s like the old adage about buying a bike where you want it strong, light and cheap — but you can only pick two. Here’s an example to make this clearer, using tail spend management.
Take the 80% of purchases that represent 20% of your spend and you will likely find that the requestors want their stuff (or services) delivered quickly and easily. You as a category manager want that too, and don’t want maverick spending, but you’re also focused on big sourcing deals and can’t get bogged down here, nor have the time to transform your thorny tail spend problem. So, you sacrifice transformation and simply work harder within your current processes, systems and metrics.
But if you’re a more advanced firm and have sourced all of your major spend areas a few times, you may have to lower your procurement involvement spend thresholds, wean yourself off of p-cards and figure out a way to improve your stakeholder satisfaction scores when they find you and your complicated systems and policies a barrier to engaging with you more meaningfully.
So, you need to transform your processes, policies and systems to re-engineer this deceptively toxic and disparate amalgam of spending that is in the tail. More problematic, you need to revisit your procurement KPIs and SLAs (if you have them) to reflect this — especially since you also want to free yourself up to do more strategic innovation and SRM/SCM work.
Because marijuana is classified as a Schedule I drug by the U.S. Drug Enforcement Administration, it’s still federally illegal. For that reason, states that have legalized cannabis for medical — and especially recreational — consumption have had to implement considerable systems of regulatory compliance for businesses to follow.
Spend Matters welcomes this guest post from Howie Hahn, senior sales engineer at Esker.
Success in manufacturing depends on the mutually beneficial relationships between manufacturers and suppliers. Each party relies on the other to live up to its obligations, if either expects to move towards long-term success and growth. But business, like life, doesn’t always go as planned. Even relationships based on trust and mutual benefit can get rocky.
The key is to make sure that the inevitable bumps in the road don’t morph into ill feelings, mistrust or, worse, lawsuits. One tool that can help ensure that manufacturers and suppliers maintain smooth relationships is accounts payable (AP) automation.
