Proxima asks – are businesses drowning or waving when it comes to procurement and managing suppliers?

Proxima, the procurement outsourcing firm, have produced some excellent thought leadership material in recent times, most noteworthy being the Corporate Virtualization report which we featured extensively. That’s the one which analysed the accounts of large businesses to show that 70% of revenues on average for those firms was spent on third party (procurement) costs. What we found even more shocking was that the CFOs Proxima interviewed had no clue how much their organisations were spending with suppliers!

Now, Proxima has come up with something that is maybe not as radical in terms of content, but nonetheless contains some important messages, and is certainly innovative in terms of its look and feel.

“Drowning not waving – how Corporate Virtualization has got business leaders out of their depth... And where the real opportunities lie”,  is a 123 page e-book, but whilst you might think that would be a heavy read, it isn’t because it is done largely with graphics. Each page has on average only one or two sentences of text, sometimes less – just a single word in some cases. that is augmented by attractive graphics, using cartoon type images, attractive colours and design. So you can read the whole thing in about 15 minutes flat if you’re fast with your ‘next page’ clicker.

The e-book is aimed very much at top executives - CEOs and CFOs rather than just procurement people, although of course it is interesting for procurement too. It takes the idea of an organisation as an island and executives fishing in deeper and deeper waters to find the “fish” (the suppliers in this analogy) to help their businesses succeed.

Four problems are identified early on in the e-book. Because of a lack of internal knowledge or infrastructure, the organisation misses opportunities for new ideas and innovation from the market. Secondly, this reliance on suppliers means the level of external risk is increased and hard to control. Thirdly, “many millions are lost or wasted” , and finally, people across the business (not just procurement) are required to choose, negotiate with and manage suppliers, something “they cannot possibly be qualified to do”.

these are the problems that need solving, according to Proxima, to “change your career and alter the landscape of the business. You just need to find the right help” . (The beginnings of the Proxima sales proposition there of course).

The e-book then goes back to some history, back to Henry Ford days, relating how we have got to this point where businesses are so reliant on external suppliers. It explains why this isn’t going to reverse soon – specialization means others can do things better and cheaper than we can do internally. Hence the modern company is more like an island than ever.

But now, Proxima says, this situation and these problems are addressed in most organisations by this thing called “Procurement”. And is this a good solution? You’ll have to wait for part 2 of our review to find out. Or even better, go and download the e-book here and read it yourself.

More in part 2 anyway.

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