Dragging through the dog days of summer? Find refreshment in this week’s event recommendations – three webinars that take an interesting look at the challenges procurement faces all year round. Click on the title of each event below to view the full description in our events calendar and connect to their registration pages.
One of the interesting things about consistently reading and hearing content from quality sources is that you start to notice trends. It is amazing how often the same topics arise at the same time in different places. We use this blog as a way to help you stay on top of the major themes in procurement and supply chain management.
Budgets are concrete things, based in fixed numbers. But it’s amazing how much time is spent discussing budgets subjectively. Much like the spend procurement brings under management, finalizing a budget can be managed with the 80/20 rule: 80 percent of the time should be dedicated to discussing 20 percent of the spend. The trick is to discuss the right 20 percent!
Procurement technology can play a bigger role in budgeting than it does today. When spend categorization aligns with projects and line items in a budget, the whole process becomes more fact-based. Past budgets can be compared to actual spending for an improved understanding of where forecasting was the most (or the least) accurate. Projects that never took place will be easier to spot, as will overages by cost center or supply requirement.
Predictable categories of spend shouldn’t be the main focus. Assuming the need was properly anticipated, only minimal changes (if any) are likely to be required from one year to the next. Instead, more benefits come when discussion centers on investment opportunities with upside, or those that carry specific risks.
Professors Michelle Steward and Jim Narus at Wake Forest University in North Carolina are learning about the B2B buying process. In particular, they are interested in the buying process that you find fits your current job. Please select one of the six models (below) that best fits your buying process. Feel free to note any differences or customized aspects if what you see does not match your job exactly. The collective findings from the study will be used for academic journal articles that are aimed at explaining how the buying process has changed over time. All participants will be sent a copy of the final paper. No names (personal nor company) will be used in the publication, only general findings will be reported.
In May I covered the first chapter of Xchanging’s 2015 Global Procurement Study. (You can read my notes here). The primary take aways were that capacity is more of a constraint than capabilities, KPIs are very diverse, and that practitioners may be getting the wrong idea about the field from media coverage that steers them one way when they need to take another.
The new chapter: External Threats Plaguing Procurement (available for download here after a brief registration) looks into global risk factors. The report couldn’t have been more timely, given how much coverage the Greek banking crisis has been getting.
There are three events taking place this week, and they are all worth attending. Click on the title of each event below to view the full description in our events calendar and connect to their registration pages.
Back in April, Greg Anderson, President of Directworks, wrote a post for their blog that contained a classic good news / bad news scenario: Making the business case for sourcing automation is more about executive relevance than ROI.
First, the good news: because of the cost reductions associated with cloud delivery models, delivering an amazing ROI shortly after implementing a sourcing solution is pretty much a slam dunk. This is especially true if you put direct as well as indirect spend through the solution.
If there was any doubt that managing the supply chain is also an exercise in managing risk, just ask someone who works in procurement – particularly the world of direct procurement. These professionals patrol the front lines of the manufacturer-supplier relationship, overseeing their company’s purchasing activity, executing purchase orders, and working with multiple stakeholders to ensure the right materials make it to the right place at an optimal cost.
It would seem procurement leaders thrive on a steady diet of pressure and caffeine. But even the most experienced professionals have their limits. Several experts weighed in on the topic this spring at the University of Tennessee Supply Chain Forum.
Over the past few years, the Federal Trade Commission (FTC) has been cracking down on unethical billing practices at major telecom carriers like Verizon and AT&T. This past October, Verizon paid as much as $64.2M in cash and phone credits to settle a class-action lawsuit for over-charging subscribers of their Family Plan[i].
The case against Verizon accused the telecommunications giant of charging Family Plan subscribers for “in-network” minutes that were supposed to be free, or charging customers with additional phones on the plan $0.45 per minute going over the allotted minute allowance (instead of the $0.25 that was charged to the primary phone on the plan).
The FTC also filed suit against AT&T for throttling data for unlimited data plan subscribers when they used over a specific amount of data during a billing cycle. They explained that AT&T failed to adequately inform customers who had signed up for the unlimited data plan that their speeds would be slowed if they used more than a certain amount of data. Even worse, “When customers canceled their contracts after being throttled, AT&T charged those customers early termination fees, which typically amount to hundreds of dollars,” the FTC said in a statement.[ii]
Telecom contracts aren’t designed to be easy to read and understand. As a result, customers frequently end up paying more than they should for their carrier’s services. While the cases of Verizon and AT&T are the result of dishonest billing practices, customers often fall victim to subpar contract terms and conditions, including overpaying or even paying for services they don’t actually need.
As we start the first full week of July, events are continuing – albeit at a slower summer pace. The upside of that is that anyone presenting a webinar knows the topic has to be really compelling to get people to attend. Click on the title of each event below to view the full description in our events calendar and connect to their registration pages.
It is the worst question Procurement ever faces. C'mon – you know what question I'm talking about. That horrible, terrible question from Finance for which there is no good answer…
If Procurement worked so hard and saved all of this money, WHERE IS IT?
The problem is that the space between negotiated and realized savings is full of pitfalls: unexpected requirements, inaccurate demand, and budget holders who see an opportunity to unofficially reallocate savings elsewhere. Even when additional value is created, many times by the end of the year the savings have all but evaporated.
This is a problem that has to be handled by the top level of the organization. If the strategic vision of the leadership team requires that all uncommitted funds be returned to a central account, they have to be willing to support Procurement by issuing a mandate. Declaring that all funds saved by Procurement are to be removed from line of business budgets is a tough love decision. But all that really matters is whether or not it is the right decision for the company as a whole.
This week our audio comes from the ThomasNet and ISM 30 Under 30 Supply Chain Rising Stars program. They hosted a panel-style interview and discussion with some of the 2014 award recipients at this year’s ISM conference. The full hour-long conversation is available on Sound Cloud if you want to hear it.
The podcast starts with each of the participating recipients and program mentors introducing themselves and then moves on to a press-conference style question and answer session with some of the most recognizable names in procurement media – including the Hackett Group, Manufacturing Talk Radio, and Spend Matters.
The excerpt I selected to share starts with a question from Supply Chain Management Review’s Editorial Director, Bob Trebilcock, as he asks how these rising stars ended up in supply chain.
This week is shortened for many companies in the US because of the July 4th holiday, but there is plenty going on in the first part of the week. I happen to think the three events taking place on Tuesday are the picks of the week. Click on the title of each event below to view the full description in our events calendar and connect to their registration pages.
These webinar notes are based on a June 17th event hosted by Puridiom and presented by Andrew Bartolini from Ardent Partners. If you are interested in viewing the full event on demand, you can do so here after a quick registration.
Based on Ardent Partners’ CPO Rising 2015 Report (which you can read more about here) this event focused in on the CPO’s agenda around collaboration, which is arguably one of the highest priorities for everyone in procurement. Even more interesting are the observations we can make when you look at the relationship between collaboration and influence.
Early in the course of a product design and manufacturing organization’s strategic sourcing project it is common to have a kickoff meeting that includes the engineering team. It is the opportunity for the sourcing project team to lay the groundwork for the rest of the effort. One of the most critical discussions that should be a part of the kickoff is around the goals, objectives, and requirements for the project.
This is an effort to be taken seriously by both procurement, which should facilitate the discussion, and engineering, which provides critical inputs. Unlike a mission statement, which is often dismissed as being an overly soft (and largely meaningless) feel-good expression of early-stage enthusiasm, goals, objectives, and requirements are tools that will be used actively in the sourcing project once it reaches the decision-making stage.
When I worked as a consultant at a procurement solutions provider, I held workshops on kickoffs for the procurement teams I coached, as part of their project management skills development. There are two tricky lessons to be learned about goals, objectives, and requirements: how to formulate them and how to tell in which category an idea belongs.
On June 5th, I covered a webinar on Robotic Process Automation (see my notes here). At the time, they announced the planned release of an eBook on the topic. It is now available for free as a download after joining the Institute for Robotic Process Automation (IRPA) - which is also free - or on Amazon for $9.99.
Unless you are a hard-core Kindle user, I’d recommend the free download, but that’s just me. The eBook is 35 very readable PDF pages that make the case for RPA equally to audiences in IT, procurement, and service providers. The best thing about the eBook is the prevalence of discipline agnostic case studies. Although the basic RPA concept is not too complex, its application may seem a little abstract. The frequent examples in the eBook make the idea easy to embrace.
This week’s guest audio is brand new – it was only posted to YouTube last week. In it, Tim Cummins, CEO of IACCM, addresses the NEC user group at a recent seminar. NEC is a provider of contracts used to bring effective project management and procurement to construction and public works projects.
The topic of Cummins’ presentation was ‘Collaboration: Why it matters, when it matters and what it means’ which is interesting because – as he observed at the beginning of the presentation – most people likely think collaboration happens despite contracts, not because of them.
He sets the stage by talking about how things have changed. We function in a world with more uncertainty, and a greater level of adaptability is required in response. There is more regulation, market volatility, and disruptive technology, and in combination these forces have contributed to the erosion of trust between people, companies, and government agencies.
This week, there are 12 events taking place – 8 of which are on Thursday. That sort of line up makes it really hard to pick just a few to recommend (not that it stopped me…) Click on the title of each event below to view the full description in our events calendar and connect to the registration pages.
It is very important for businesses to be able to react to changes in the marketplace within their supply chains. This is possible where: there is a desire to make changes; there are clear market signals; there is good information available within the supply chain; and when optimum amounts of inventory are held. (p. 22)
Inventory Management: Advanced Methods for Managing Inventory within Business Systems by Dr. Geoff Relph and Catherine Milner (Kogan Page, July 2015) is accurately described by the authors in their introduction as achieving a balance between the philosophical and the practical. In fact, despite the complexity or maturity of their approach (appropriate given the ‘Advanced Methods’ designation in the title) all of the Excel-based tools for modeling inventory requirements based on the book are available for download. It doesn’t get more practical than that.
On Tuesday, the Food & Drug Administration (FDA) announced that by 2018 all partially hydrogenated oils (the primary source of trans fats in the American diet) must be phased out of the food supply chain. The many costs associated with this change will give procurement an opportunity to have a positive impact at a time of transition. When you add up the costs of experimenting with replacement oils and reprinting/redesigning packaging and labels, Roger Clemens, a pharmacology professor at USC, estimates it could cost companies as much as $200K per product.
One of the most powerful things you can do with broken windows management is to empower your employees to fix their own issues whenever possible.” (p. 35)
In his fifth business book (seventh overall) Dr. Tom DePaoli takes broken windows theory and combines it with liberal doses of lean methodology and his own no-nonsense approach to process improvement. While this is not a long book, just 70 pages long, it is a working book. This is emphasized by the pages at the back that are specifically designated for “Doodles, Notes, and Ideas.”