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Are your spend classification efforts relevant and truly moving the needle?

Last month, we examined the current constraints on procurement today and discovered that data spend quality is an issue that’s holding organizations back. Digging in further, we found that spend classification is a big factor affecting organizations’ abilities to get high-quality data. The reality is you don’t know what you’re actually spending in each category. For many procurement teams, getting the insights they need is challenging because classification is painful and time-consuming, and they don’t know how to make things better.

Let’s take a deeper dive into some of the problems with spend classification today:

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5 Easy Steps to Better Manage Your Suppliers

If you work for a large organization, you most likely have tens of thousands of suppliers, and any of them, to some extent, can pose a risk to your organization's operations, brand or customers. In addition, managing that many business partners is a difficult task that takes time, attention, organization and resources.

You and your suppliers are intimately linked, and what they do affects you, for better or worse. As a result, you need to be able to monitor, manage and collaborate with your entire supply base more broadly and effectively than ever before.

Before you get started, ask yourself these questions:

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A ‘Big Picture’ Procurement Mindset

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There is a considerable difference between what procurement can do with an eProcurement platform, what they should do, and what they actually do. Part of the problem is the level of technology segmentation that exists in the typical enterprise. Procurement has technology, legal has technology, sales has technology, etc. Everyone transacts with and stores their information separately. It may not be intentional, but it prevents companies from getting the full benefit of the technology they implement.

Huge strides have been made in digitizing procurement, but the work is not nearly done. Procurement needs to move into a larger business role where it is highly involved in the development and execution of enterprise-wide business strategy — and therefore enterprise-wide technology and data development.

If procurement is to think “big picture” when it comes to data and technology, it has to include suppliers as well. Corcentric has some reasons why.

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SIG Summit sneak peek: It’s not your average procurement conference

Readers of Spend Matters and SIG’s member companies have a lot of overlap. I’ve read many articles on this site from companies that are part of the SIG community. Through the years, Spend Matters has never failed in delivering amazing content that is actionable and reality-based, as well as non-sponsored ratings for those of us who work with procurement technology.

In that way, SIG and Spend Matters are kindred spirits. SIG provides its members thought leadership, networking and career training so sourcing, procurement and risk professionals can stay on top of the latest innovations — from updated best practices to the technologies that continue to change the way we work.

As the President and CEO of SIG, I’ve seen the industry grow and the roles of sourcing, procurement and risk professionals morph. We’re all staring down the barrel at these new technologies of robotics, automation and machine learning and wondering, Is my job next? Well, it could be. But I not only believe that this technology comes in peace, I want to show you how it can help you be a little bit better at your job every day.

Want to find out how? Join me and over 350 of your colleagues next week at SIG’s Global Executive Summit in Carlsbad, California, Oct. 14-16.

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5 benefits of multi-tier supply chain transparency

Consumers expect brands and retailers to know much more about their products than in the past, such as where it was sourced, how it was manufactured, who was involved or what countries it passed through on its journey to the store. All this requires a deeper understanding of the supply chain.

While multi-tier supply chain transparency is challenging to achieve, it can reap serious benefits for businesses that invest the time and resources. Taking progressive steps to achieve visibility at multiple tiers can benefit businesses in five ways.

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From tactical to strategic sourcing: Going beyond daily battles to long-term victory

Do you ever feel like you’ve been winning the battles but still losing the war? In the art of war, military strategists are required to look beyond short-term skirmishes, where little if any ground is gained, and instead focus on a vision for victory in the longer term. That doesn’t mean suddenly pulling your forces from the front or ignoring enemy advances but has more to do with creating a better line of sight between the guys in the trenches and the generals in the tents.

Joonas Jantunen, Cloudia’s CEO for the Middle East, sees a similar distinction to be made in today’s business procurement wars. Every large procurement function aspires to be strategic, but most are running their operations on short-term tactics.

Strategic sourcing, in contrast, sets out to align all sourcing practices with an organization’s long-term business objectives, with a view to creating new and sustainable value.

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Big Savings in Small Spend — Tales from the Tail

In the world of strategic sourcing, realizing 5 to 8% savings is considered to be impressive. After all, these are the high-spend categories and are supposedly already well-managed and frequently revisited for improvement opportunities. In contrast, when our clients work with Simfoni on tail spend management or low-value spend engagements, we witness savings that can easily exceed 20% from time to time. This article explains how — with the right combination of subject matter expertise, leverage and technology — such savings are achievable.

In the world of tail spend, we typically pursue the following sourcing levers: Demand Challenge, Specification Alignment, Volume Leverage, Competitive Bidding, Alternate Solutions, Supply Chain Optimization.

I’ll explain each lever and illustrate how savings can be achieved in excess of 20%.

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Customize your internal payment processing needs with ‘Pay by Invoice’ at Amazon Business

No two businesses are alike. Each one has their own goals, internal policies and procedures. At Amazon Business we obsess around the differences in our customers, and how we can best support their internal procurement, reconciliation and payment teams to streamline their procure-to-pay processes. To do this, Amazon Business is helping innovate on behalf of its customers by offering a customizable invoicing payment method for businesses of all sizes and industries — Pay by Invoice.

Pay by Invoice allows eligible customers the option to buy now and pay later with payment terms and a purchasing line offered on Amazon Business.

Amazon Business believes a trusted invoicing experience enables worry-free purchasing — and we do this by making invoicing configurable, accessible and dependable for customers. Pay by Invoice provides Amazon Business customers access to millions of suppliers, with the convenience of using a single configurable invoicing solution to purchase. The vision of Pay by Invoice was to put businesses back in the driver’s seat. No need to change internal policies to work with a supplier or have separate negotiated terms with each individual supplier. With Pay by Invoice, the customer chooses what works for them.

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Supplier Risk & Ethics Analysis: Time to Get Started

For many buying firms, the quality of goods and services are contingent on their suppliers. Suppliers can indirectly impact brand perception from business to consumer. While delivered goods can be inspected through quantitative metrics, there are a host of other metrics that firms should track related to their vendors, including risk and ethics.

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Finding the Right Fit and Function for Your Procurement Vision

Most procurement departments would agree that introducing a category management structure is a good way to secure the best-in-class status they crave. On the tactical-to-strategic spectrum, it’s still a notch below “trusted adviser” status, but it’s several more notches removed from reactive purchasing and the three-bid-and-buy mentality. While they’ve largely got a consistent end goal, procurement departments vary wildly when it comes to progress.

Many are still hard at work introducing even a foundational level of strategy. Others are mired in damage control after trying and failing to build a more strategic procurement function. Even those exemplary departments that can call category management a next step have a lot of work ahead. Like their less advanced peers, they’ve got to change their organization’s mindset if they want to truly transform procurement. To transform the function, they’ve got to first change the way other business units perceive and engage it.

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Mid-Market Procurement — The Pitfalls of Current Approaches

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Mid-market companies are at a significant disadvantage when compared to larger corporations — a key finding from Simfoni’s analysis of its customers’ procurement and savings delivery capabilities in mid-market companies.

It’s OK to obsess about top-line growth, but what lies beneath is a supply chain that eats into profit since it is not controlled and optimized. Mid-market companies are missing out on at least 5-10 percentage EBITDA points achieved through procurement effectiveness that their larger corporate peers routinely extract.

So why the disadvantage? Essentially the mid-market procurement challenge can be broken into three areas: resources, technology, leverage. Let’s look at each.

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Delivering a delightful buying experience to your entire company with Business Prime

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Amazon Business launched in 2015 with a goal of addressing the needs of business customers who loved shopping on Amazon. These customers had specific unmet expectations for business purchasing in the consumer-centric experience. Amazon Business now provides “Everything you love about Amazon, for your Business.” Right from the start, some of our most enthusiastic customers were Prime members. It turns out that business customers loved fast, free shipping and wanted business benefits too. Business Prime provides business customers the familiar Prime shopping experience employees love at home, with plans and benefits suited for work.