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"The Point" is written by BMP Editor Kelly Barner as well as a diverse group of guest contributors.

Procurement on YouTube: Opportunities in a Challenging Economy

2012 saw some of the best known supply management analysts move into the solutions sector: Constantine Limberakis left Aberdeen’s Global Supply Management practice to become the Director of Marketing for HICX Solutions and Mickey North-Rizza left Gartner Group (where she landed after they acquired AMR Research) to become BravoSolutions’ Vice President of Strategic Services.

 

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How to Choose

So here we are in 2013. Happy New Year. I know my resolution is to live a healthier lifestyle with diet and exercise. I am sure that sounds familiar to many others!!

In that same light, what are we going to do differently to move our respective organizations forward to a healthier place? The competitive environment is such that controlling costs has never been more important.

Today’s eSourcing Wiki-Wednesday topic is Selecting Categories for Outsourcing.In order to contain costs, the article talks about using another organization to source indirect spend. This will save you time, money and resources. The question is how to choose which categories to outsource. 

Certainly that begins with a spend analysis project to understand where you DO spend the money in that space. I also found this article from Accenture that will help gain more understanding of the importance of controlling your indirect spend.

Setting up a process for controlling indirect spend is vital. Utilizing an outside resource enables your internal team to focus on YOUR core competencies.

This does take time and effort but it is incredibly valuable. What have you done to control indirect spend? Did you outsource or build this expertise internally? What did you find for savings in costs and efficiencies?

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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.

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Procurement on YouTube: What is Crowdsourcing?

Each Monday, Buyers Meeting Point covers the coming week in Supply Management for the PI Window on Business Blog Talk Radio Program, with host Jon Hansen. We cover the coming conferences and webinars and help you decide how to allocate your professional development time for the coming week.

In addition to that review of the calendar, we present a guest sound bite – a timely excerpt that gives us an opportunity to further explore a topic of importance based on the time of year or the events being held. Most of our sound bites come from YouTube, where we comb through funny cat videos to bring you two minutes of high value multi-media procurement thought leadership.

In this week’s guest sound bite, we’re taking on one of the new ideas that we may get to hear more about in the Aberdeen Group CPO Summit recap webinar on Thursday this week – CrowdSourcing. In this video, Brian Bednarek, CEO of Mesh 01 and an Industry Analyst, speaks with CBS News Online about crowdsourcing and how it's changing the way companies work.

 

After watching the video, I did what Brian suggested – I put crowdsourcing and procurement into Google. I came up with a number of blog posts by the usual suspects, and their reactions were mixed. On the upside, crowdsourcing allows buyers access to the collective genius of a large group of resources they don’t have to target. The purchasing is done at will, on demand, and a la carte. On the other hand, quality may come into question, as do loyalty and continuity between projects. It’s really a question of value – you may spend less by taking the crowdsourced approach, but something beyond margin is being sacrificed to bring you those lower prices. No judgment here on good or bad – simply make sure you understand what you get for what you are paying.

 

Of course, that all assumes that procurement professionals will be using crowdsourcing as a way of getting the services their organization. The other possibility is that companies start crowdsourcing for solutions to their procurement challenges. We could find ourselves reaching out to the community at large in a more formal way than we do with social media sites today.

 

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Procurement on YouTube: Procurement Transformation at the 2012 Olympics

In this week’s procurement YouTube video, we hear a new clip from Matthew Hattersley, Commercial Partner at Clarion, as he talks about Transformational Procurement. Clarion recently hosted a seminar at which Paul Dickinson from the Olympic Delivery Authority and head of procurement for the Olympic Park shared his experiences.

 

In our August 6th Weekly Procurement Update on the PI Window on Business Blog Talk Radio program we heard from Jan Matthews, the Head of Catering, Cleaning & Waste for the London Organizing Committee as she outlined the requirements for the overall catering services program.

 

Now that the 2012 London Olympics are done, and were by all accounts an overwhelming success, those involved are getting an opportunity to reflect on what they learned. This includes procurement, and the transformational efforts that were attempted.

 

According to what Paul Dickinson shared at the seminar, there are two primary reasons why attempts at procurement transformation fail:

 

  1. The strategy in place must be clear at the executive and end user levels and be connected by clear plans that drive the implementation of the strategy.
  2. Document supplier requirements, including outputs and timetables, and use objective, measurable milestones so all parties involved can track how the effort is progressing.

Click on the video below to view it for yourself (or click here to view it on YouTube if your browser does not support Flash) and then join the conversation here.

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Procurement on YouTube: WBENC's Pamela Eason on Holding Procurement Teams Accountable for Diversity Results

Each Monday, Buyers Meeting Point covers the coming week in Supply Management for the PI Window on Business Blog Talk Radio Program, with host Jon Hansen. We cover the coming conferences and webinars and help you decide how to allocate your professional development time for the coming week.

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Procurement on YouTube: Who is Responsible for Cost Management in an Organization?

Each Monday, Buyers Meeting Point covers the coming week in Supply Management for the PI Window on Business Blog Talk Radio Program, with host Jon Hansen. We cover the coming conferences and webinars and help you decide how to allocate your professional development time for the coming week.

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Procurement Decision Making - Who Empowers Who?

This week’s Wiki-Wednesday article is part of the series on Next Generation Sourcing: Empowerment. As a strategy in procurement, empowerment has the potential to change the course of a project at many points:

Which suppliers are invited?

How will we structure the RFP or RFQ?

What negotiation strategy will be the most effective?

But no other decision in a project has more of an impact than the supplier award. Which suppliers will be awarded contracts, for how much, and what will the terms be?

Depending upon the organizational structure in place, and the model of the procurement organization, their role in that decision can vary from decision maker to observer. The model may also vary from project to project, and between direct and indirect spend.

Procurement as Decision Maker

In categories where cost is the primary factor affecting a decision, the project is to get a specified good or service for the total lowest cost, procurement will work the sourcing process and notify the business which supplier(s) offered the lowest pricing. Procurement is positioned to suppliers as the process owner and the ultimate authority for the category. If there is an executive approval process for this award, it is usually an administrative sign off on the decision before a contract is signed.

Procurement as Facilitator

In direct categories where there is an active business owner, procurement manages the sourcing process (with frequent involvement of the business owner) and then presents all qualified options so the owner can make an award decision. Procurement can present themselves to suppliers as an objective party, open to their ideas, taking care not to appear as though they have no influence and allow suppliers to bypass them. Executive approval for the award will ensure that the business owner does not give inappropriate advantage to the incumbent or miss out on opportunities to innovate based on aversion to change.

Procurement as Collaborator

In strategic categories of spend, procurement and business owners may take equal roles in the sourcing process. Procurement owns the sourcing process and technology use in the project and the business owner is responsible for category knowledge. Each party is able to leverage their strengths, collaborating on the structure of the RFP, negotiation strategy, and execution. Both will have input on the award decision, with executive approval of the recommended award made by the combined team.

If you are interested in reading more about decision making in procurement, Charles Dominick of the Next Level Purchasing Association published a three part blog series on the topic on the eSourcing Forum in 2008 that still holds true. In these three posts, he looks at basic, advanced, and expert decision making capabilities across cost, support performance, and innovation.

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Use the Magnifying Glass

How is your vision? Is it 20-20 or do you need lenses or a magnifying glass? How about your supplier and spend visibility?

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Keep it in YOUR wallet

If you found money laying on the sidewalk, would you pick it up? Of course you would!

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White Paper: Implementing Strategies in Extreme Negotiations

Hurricane Sandy has just battered the East Coast of the U.S. – millions of people (including the Buyers Meeting Point team) are still without power or starting to assess the damage and begin the cleanup.Our thoughts go out to everyone impacted by this massive and powerful storm.

You can’t always predict how a person or an area will be affected by dangerous conditions, but once you have notice that a storm is coming, any time left before impact should be used to prepare.

We learn a lot about ourselves in how we cope under pressure, and being prepared up front is strategy number one. Just as you have to gather the essentials for extreme weather – like water, flashlights, and non-perishable food – you have to gather the essentials before a negotiation. This is particularly true if you expect the negotiation to be high stakes or particularly challenging.

In the white paper “Implementing Strategies in Extreme Negotiations” (a free download from Harvard Business Review), based on a conversation with Jeff Weiss and Jonathan Hughes, both partners at Vantage Partners, you’ll get an overview of ways to prepare for extreme negotiations. Included in the article are a preparation checklist and recommendations on how to handle threats, how to hone your skills, and how to deal with specific situations that may arise in a negotiation.

Some of their tactics are to be used in advance and some are for while you are in the eye of the storm. All of them are intended to prepare all kinds of negotiators – not just the ones that enjoy the thrill of the storm. Once you have read the graphics and tables in the white paper, there is sure to beat least one that you will print out and hang on your cube wall.

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SciQuest Acquires Spend Radar: Investing in Excellence Through Acquisition

The procurement function is going through a time of expanding expectations and responsibilities in most organizations. Depending on the structure of each company and industry, the move may be into supply chain, inventory management, finance, or raw materials management. In order to meet the challenges this presents, we need solutions that offer expanded capabilities.

Over the last twelve months, there have been several high profile acquisitions in the supply management space. These acquisitions were aimed at integrating the source-to-settle process into other corporate systems and processes. As these large players became subsets of less specialized solution providers, the opportunity was created for new solution providers to fill the need for dedicated solutions offering the right combination of breadth and depth.

One company seizing the opportunity to increase their solution footprint and fill the void is SciQuest (NASDAQ: SCI), a provider of on-demand strategic procurement and supplier management solutions. For several years they have been adding to their portfolio through the acquisition of specialized players within spend management. In December 2010 they acquired AECsoft USA, a provider of provider of Supplier Information Management (SIM), supplier diversity and sourcing solutions. Then in July of 2012 they acquired Upside Software, a Contract Lifecycle Management (CLM) solution.

 

SpendRadarTheir latest acquisition is Spend Radar, a spend analysis solution provider. Although this brings them closer to having a complete end-to-end solution, the key to their success will be in their ability to integrate their acquisitions without sacrificing the flexibility or performance of any one solution. When asked about this part of their strategic plan, Eric Zoetmulder, SciQuest’s Director of Product Marketing, told Buyers Meeting Point, "It is true that we have grown our offering through acquisitions; we have been very selective, believing that any large or mid-size commercial business should now consider SciQuest as a prospective solution partner, whether they are looking for a point solution or one that spans the entire source-to-settle process."

SciQuest’s ability to harness the forward-looking creativity of the Spend Radar team will determine their ability to maintain the reputation Spend Radar has worked to build when compared with other spend analysis solutions. In July of 2011 Buyers Meeting Point interviewed Brian Daniels, former CEO of Spend Radar, now VP of Spend Analytics at SciQuest, and we were struck by his desire to expand the capabilities of spend analysis beyond reporting and analytics to performance management – providing visibility into savings realization. "We recognize that savings realization and compliance are key to the value proposition of a spend analysis solution,” said Daniels. “It is impossible to provide spend teams with actionable data on suppliers and pricing if you can't also provide them with fast, frequent, automated, and high-quality refreshes."

There is no indication that plans to enhance this part of their solution roadmap have been altered by the acquisition. If anything, SciQuest recognizes the competitive advantage this will represent once available, and wants to be sure the new relationship between the two organizations does not jeopardize it. To this end, the leadership team at Spend Radar has been left in place, and the brand will not be altered.

 

We look forward to seeing the future potential of this collaboration come to fruition, and how yet another provider consolidation impacts the other solution providers in this space.

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Getting to Know You

It takes time to get to know someone - socially and professionally. As you spend time together, more and more is known about the depth and strength of their capabilities, styles and behaviors.

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Services Demand Management: Why?

This week’s Wiki-Wednesday article, ‘Shape Demand… For Services’, looks at the challenges procurement organizations face as they work to address internal demand for services. As an increasing number of non-core functions are handled by third parties, it is important to consider the management of this spend as the outsourced category model it is.

 

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No More Mystery

Recently at a magic show, of course I was trying to discover the secret of how the tricks happened. Somehow, we could never see it. However, if it gets broken down into seperate compartments, then each piece of the trick is explainable and the 'magic' is revealed.

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Roses and Electric Cars

We had a hybrid dog (otherwise known as a mutt) for 16 years and she was very strong and healthy. We have a beautiful garden full of hybrid roses in such a variety of colors that can survive harsh climates.

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Subtraction not Addition

In the movie Good Will Hunting, a janitor is incredibly bright and solves the most intricate mathematical problems as if it was as natural as breathing. The movie highlights the journey to discovering and utilizing your talents, gaining confidence and then setting priorities.

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How to be like Gumby and Pokey

I have both Gumby and Pokey on my desk. I discovered them a few years ago in my children's toy boxes. I did not even know we had them in the house. It was perfect timing. I was involved in a project that was constantly changing requirements and timelines. I was the project leader and had to remind myself to be flexible. To this day, these two figurines remind me of the advantages of that capability.

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Planning for the Party

Have you ever hosted a party and been concerned about running out of refreshments? I worry about it almost every time, especially around major holidays or celebrations such as graduation parties or anniversaries. I do a great deal of planning and preparation. Most always, there is plenty for everyone and lots of leftovers for the next several days.

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Look at the Big Picture

This week's eSourcing Wiki article is about Transactional Focus. In the article, it is emphasizing there is a need to look at the entire supply chain, or the BIG PICTURE.

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