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.
This week's esourcing wiki series is about cost avoidance. It is very easy to calculate the 'money' part when savings are involved. Old cost - new cost times volume. Simple. But how does procurement get credit when the result of a sourcing initiatives is price increases? As far as the bottom line is concerned, it is ALL about the money!!
The eSourcing wiki series this week is about the Benefits of Contract management. There is a very positive story with statistics to back it up on why organizations should choose and implement a process for managing contracts.
Everyone has a story of a partnership or business relationship that changed over time and eventually dissolved. That is the nature of things. What is difficult is when that was not solidified from the beginning with a contract of some kind to protect both parties and the continuity of the business and the clients. No one likes that type of drama or thrill added to their workday!
Today’s eSourcing Wiki-Wednesday topic outlines the many roles and responsibilities associated with being a successful sourcing professional. One of those roles is to provide ‘deep domain expertise’:
Management, members of the individual procurement organizations, and stakeholders will all expect the procurement professionals in the center of excellence to have deep domain expertise, especially in strategic categories.
When I was growing up, we had shortcuts to our friends houses in the neighborhood. There was a well worn path through the backyards. Grass did not have a chance of ever growing!!
Everyone loves the benefits of shortcuts. Easier and faster! This week's esourcing Wiki is about the benefits of utilizing optimization. A fancy word for shortcut!
There is a lot of news lately about the Titanic and the voyage of 100 years ago. With that in mind, I looked at today in history and saw many interesting facts from hundreds of years ago to just a few years ago. It always strikes me that something I think just happened was actually in 1980 or 1990 something.
So how does all this tie into procurement. What are you doing today that someone will look at 100 years from now?
This week’s eSourcing Wiki excerpt is a description of the three most common procurement organizational models: centralized, decentralized, and center-led. Each has its advantages and disadvantages, and while one model or another may be en vogue for a time, getting the right fit should be based on how to best serve the organization at large.
Most of us ask the 'what if' question to ourselves about many of our personal decisions. "What if I eat another piece of cake?" "What if I take this job?" "What if I say yes to.....". For such a small word, "if" carries a lot of weight.
In the use of optimization for your analysis of a procurement bid, using "what if" scenarios also carries a lot of weight. In this week's featured eSourcing Wiki article, we introduced the idea of Optimization.
When a sourcing professional is being reviewed or considered for a new position, we often look at their negotiation skills, analytical abilities and sometimes their communication style. However, it is rare when we review their project management expertise. This is critical and often overlooked and underrated. Without it, timelines get stretched and deadlines missed if projects are not managed properly. I myself have been frustrated by others when it becomes apparent they are not capable of developing a plan and following the process to completion. I would imagine you have been too.
The following case study is from the eSourcing Wiki article on eRFx Best Practices. If you are interested in reading more about best practices, you can either visit the eSourcing Wiki or read today's eSourcing Wiki Wednesday article.
Sears, as one of the largest retailers, has a slogan "The softer side of Sears". This week's eSourcing Wiki article is about eAuctions in Sourcing. It too describes a softer side of auctions which offers a great deal of value.
Most of the time when a company is running an auction, they are focused on savings and getting the lowest price. While the award may not go to the supplier with the lowest price, it sets the stage overall.
Much of the news this week has been reviewing the events of a year ago when a tsunami hit Japan. Like most things of this nature, it seems impossible that a year has passed. The rebuilding is a massive undertaking and will be years and decades in the making.
This event displayed the risk and exposure that so many companies have within their supply chain. With the globalization of businesses, events around the world can significantly impact operations and profits.
I found this article in Industry Week very appropriate as it discussed the risk and lessons learned over the past year. So many organizations have survived but not many really changed much in the interim. Those that are building a strategy have followed some of what is discussed in this article.
For anyone that has ever run an eSourcing project, there is a typical flow that most processes follow. The project kicks off, and everyone’s focus is split between costs and known issues with the incumbent suppliers(s). Procurement uses historical spend to put together a list of line items with quantity and specification data. The company’s standard list of supplier questions is loaded into the eRFX system, along with any additional questions for suppliers that relate to the category of spend in question or new developments in the industry being sourced from. Everyone works frantically until the day the RFP opens and then – you wait. The project comes to a complete standstill for the two weeks (e.g.) that the RFP is open. Then the mad dash begins again as you wade through and evaluate supplier responses, pricing, and attachments.
You have been working on finalizing the award and determining who should get the opportunity to work with you. Have you considered that how you set the RFP up to begin with may have set the stage for that end game? Did you eliminate smaller suppliers due to the size of the bid? Should you have lotted things differently to allow more competition?
When you hear the word "evolution" does it bring you back to your high school days in Biology and discussions of Darwin? Survival of the Fittest? That is where our businesses are these days in the economic climate we find ourselves in. Otherwise, you may falter and get "acquired" by a bigger and faster species!!
So what does Spend Analysis have to do with that? And will it solve all the problems of your world? I don't think there is any magic potion for you. However, there is a great deal of value for utilizing Spend analysis.
This week’s eSourcing Wiki-Wednesday topic is Metrics for the Rest of Us – an article that breaks metrics down into Cost Avoidance and Reduction, Process Improvement, Operations, Customer Service, and Asset Utilization.
The last of the Cost reduction and avoidance metrics, “Spend Under Management” is defined as:
Total Spend Under Management / Total Spend.
As noted in the eSourcing Wiki, this is a straightforward calculation. The problem is not with our ability to divide one number by another, but in defining the inputs to the equation. Total spend should be easy, although your department may use either total annual spend or total addressable spend (which is likely to exclude taxes and salaries). The real question is to decide what spend is designated as being ‘under management’.
Whenever I see something that is titled "Back to Basics" I almost groan. That is like the latest secret to loosing 20 pounds. Here it is - Fewer calories in and more calories out. Really? Like diet and exercise are anything new?
We are so swept up in the immediate, we often can't step back and refresh to look at the whole picture. So that is why it is important from time to time to return to the basics.
This week’s eSourcing Wiki-Wednesday topic is Sourcing Success Enablers. Under the Organizational Best Practices heading is a brief paragraph that gets to the heart of what all procurement and supply management departments need to stay focused on:
“As part of a supply chain focus, successful companies do not overlook indirect categories. Chances are some categories (such as office equipment, professional services, etc.) consume a significant part of the total organizational spend and will also benefit from a review. Strategically source everything. (Often strategic sourcing means outsourcing procurement of non-critical, low value spend, or commodity categories to external organizations that also follow strategic sourcing principles.)”
Today's eSourcing wiki article, The Quest for Purchasing Fire, discusses the process and obstacles for getting buy-in from C-level executives as well as the stakeholders that will utilize an esourcing or eprocurement solution.
I have been the project lead on several software implementations and most of them have been difficult technically but the most challenging area was the change management for the end-user and the selling of the benefits. Pointing out the WIIFM (what's in it for me) definitely made a positive difference in moving the transition forward.