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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.

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Subscribe to this list via RSS Blog posts tagged in Savings
Guest Post on the Social Contracting Blog: Is there “Tough Love” Embedded in Your Budget Process?

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?

Ugh.

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.

CLICK HERE TO READ THE REST OF THIS POST ON THE SOCIAL CONTRACTING BLOG

Book Review: The Procurement Value Proposition

“Although procurement has certainly evolved from its early roots, it still faces challenges in terms of executive recognition, talent management and organizational challenges. Modern enterprises are faced with a massive set of new challenges, including the forces of globalization, increased risk, complex supply chains, and the spread of government regulation on decision making, not to mention the tremendous strain of man’s presence on the earth’s natural resources.” (p. 1)

 

The Procurement Value Proposition (Kogan Page, December 2014) takes on some of the most pressing challenges facing procurement today and makes them seem both more comprehensible and realistically addressable. As acknowledged in the quote above, taken from the book’s introduction, procurement has evolved significantly since the early days when we got our start in the railroad industry. The problem we must own today is that the organizations we support have evolved faster and more dramatically than we have. What procurement needs is a better understanding of how to fuel our development.

 

Posted by on in Procurement
Is Procurement Crate Trained?

“Crate training uses a dog's natural instincts as a den animal. A wild dog's den is his home, a place to sleep, hide from danger, and raise a family. The crate becomes your dog's den, an ideal spot to snooze or take refuge during a thunderstorm.”

Humane Society

 

Where does procurement fall on the art/science continuum?

In a July 14th article on NewsDay, NYASHA CHIZU asked ‘Is Procurement an Art or a Science?

In the article, he makes the following statement:

“There is definitely an art to good procurement but on the other hand, taking a scientific approach to options analysis, requirements development and the procurement evaluation process can facilitate a more successful procurement project.”

Tagged in: Savings Technology

Posted by on in Procurement
The Funny Thing about Auctions…

Last month, Alun Rafique from Market Dojo and I co-wrote an article for Procurement Insights about Variables in the Adoption of Auctions. A discussion about the article really picked up steam in the ISM group on LinkedIn, and one of the questions posed in response was “Someone explain to me how a Reverse Auction is fair and equitable to the supplier..."

After considering that question carefully, Market Dojo published an article that asks a question in response: “Should Suppliers Still Fear eAuctions?” The article, which you can read here, takes an interesting look at the progression of auctions from carefully managed consultant resource, to part of an ERP system, to their somewhat questionable state today – in limbo in a world where procurement is driven to create as much value as savings. A third question in this discussion might be, are auctions still relevant?

 

Webinar Notes: Calculating and Driving Sourcing Savings to the Bottom Line

In this week’s featured event we heard from the Sourcing Interests Group Thought Leaders Council. They offered their definitions of savings as well as best practices. If you are interested in more about the members of the Council, read the SIG page about them in the Resource Center.

The Thought Leaders Council advises SIG on the build-out of the SIG Resource Center, makes regular contributions, serves as subject matter experts, and conducts working groups. The Council is representative of the SIG Membership, in that the majority of members are sourcing executives from the Buy-side. The Working Groups take suggestions from the SIG community and build guidelines for sourcing initiatives and categories.

Webinar Notes: Bridging the Strategic Sourcing and Savings Implementation Gap

This week’s featured event (hosted by ISM and sponsored by Zycus) was primarily presented by Spend Matters’ Jason Busch. The webinar was recorded and will be available on ISM’s webinars page.

 

Procurement on YouTube: Ideas for Saving Money

In this year-opening Procurement on YouTube feature, we'd like to kick off the year on a lighthearted note. The team at Market Dojo has put together a series of six very entertaining videos on how to save your company money.

This week’s Wiki-Wednesday article is about the challenges of capturing savings due to cost reduction and avoidance. One of the sections addresses Total Cost of Ownership (TCO), and the difficulties of calculating and reporting on those costs.

Note: This post by Kelly Barner originally appeared in the March 2012 PSD Group Procurement & Supply Chain Newsletter.

In this week's eSourcing Wiki-Wednesday excerpt on Seven Facets of Cost Reduction and Avoidance, compensation structures are brought into question as they incent procurement professionals to behave a certain way, 'Like all employees, a supply manager will engage in behaviors rewarded by the company. This will create a problem if cost avoidance or cost reduction efforts beyond hard savings do not count toward a supply manager’s compensation and performance.'

As organizational expectations of procurement increase, many practitioners are questioning the structure of their compensation plans. Traditionally, procurement professionals received a straight salary. If there was a bonus structure in place, the bonus was typically based on corporate performance against stated goals and qualitative individual performance rather than savings targets.

This week’s event pick was hosted by Sourcing Interests Group and sponsored by Ariba but the team from McDonald’s absolutely stole the show. They shared information so detailed that SIG was unable to share the slides from the webinar even with their own members. In an effort to respect their wish to contain the detailed information they shared within the live session, I will focus on their general recommendations regarding a successful category management program and how it is different than traditional strategic sourcing.

We are all familiar with the line from the "Jerry Maguire" movie - SHOW ME THE MONEY! In procurement we are often asked to SHOW ME THE SAVINGS! The blog of the week discusses just that which is why I selected it.

This week’s BMP event pick, “Quick Wins to Boost This Year’s Savings Total” by CPO Agenda and CapGemini, was an absolute winner.

The event had an interesting format - four speakers, same topic: quick savings wins. While all of the speakers were qualified, two set themselves aside by taking on the harsh realities of trying to increase savings for the year with only a sort time left to go.

Tagged in: Events Savings Webinars

Posted by on in Procurement

This week's Wiki-Wednesday topic is CAPEX (Capital Expenditures) v. OPEX (Operating Expenditures). Once you understand the difference between them, the next step is realizing the impact that distinction has on negotiated savings recognition.

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