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  • A Deep Dive into the Cost Drivers of a Direct Mail Program – Part 1

    Overall, there is evidence that direct mail is still holding strong as a marketing tactic and this is reflected in companies’ marketing strategies. However, before you begin executing a direct mail campaign, it is important to understand the components and factors that influence this marketing strategy’s cost. There are four main cost drivers to any direct mail program: Mail lists (who and where the mailer is being sent to), Creative and design (the messaging and layout), Print and lettershop (producing the mailer), and Postage (mailing the mailer). While the costs of creative/design, print, and lettershop can be managed through a standard sourcing process, mail lists and postage are a bit more complex. While mails lists and postage are commonly overlooked when it comes to identifying cost saving opportunities, there are options available for navigating the cost drivers of these two components. In this first post of a two-part series, we will cover some basics on mail lists ...

    by Megan Connell
    Wednesday, 29 July 2015
  • Book Review: Strategic Sourcing and Category Management: Lessons Learned at IKEA

      Category Management The first question that might come to mind is ‘how does the author suggest we segment our spend or supply base to get the best results from category management?’ He advocates segmentation by manufacturing process – and yet he introduces the idea that the processes he is accustomed to are different than the ones most commonly seen. The steps in any process must be allowed to influence each other – not just downstream, but back and forth. This philosophy brings the entire process to life and pushes those managing it to emphasize agility and flexibility. Several of the take-aways I detail below provide examples of where learning something or changing a requirement must be allowed to affect the trajectory of the project no matter how far through the process it is. That being said, Carlsson does not suggest that processes should be ‘loose’. In fact, he explains that the difference is in the details – the difference between mostly getting a process right and ...

    by Kelly Barner
    Monday, 27 July 2015
  • Webinar Recommendations for July 27 - 31, 2015: Digital marketing spend, Selecting a spend analysis solution, and Early engagement in sourcing projects

      The digital disconnect (Proxima Group) 7/28, 11am EDT If there is a category of spend that has only most completely evaded procurement management it is legal. If there is ANOTHER category of spend that has eluded us it is marketing. In this week’s event. Proxima Group and a panel including members form Warburtons and Transform UK will take on digital marketing spend. According to Proxima, digital marketing budgets are on the rise, and yet, companies have had difficulty pinning down the return on that investment – just ask Twitter and Facebook. The combination of rising budget and minimal governance is good news for procurement teams looking to break into marketing spend.   Spend Analysis Solution Selection: What to Look for in Software and Services (NLPA) 7/28, 11:30am EDT Although I don’t usually think of the Next Level Purchasing Association hosting technology-analyst style webinars, this event promises to be a line drive out of the park. As they point out in the ...

    by Kelly Barner
    Saturday, 25 July 2015
  • Guest Post on Design News: Your Supplier is Not Your Friend

    Companies should never confuse a supply relationship with friendship. In fact, part of the role of any good provider is to challenge its clients in a productive way. Many times, companies outsource in order to transfer the majority of risk to suppliers. In June, Design News hosted a webcast on product lifecycle management presented by team members at Sparton, a firm that handles the both design and manufacturing efforts for low/medium-volume, high-complexity components. Their presentation, “Why Product Lifecycle Management Is an Emerging Trend,” included all of the cost, timing, and supply chain implications of PLM.   During the webcast, Sparton presenters spoke about the importance of building relationships with key suppliers. That emphasis makes sense because, in Sparton’s role as an outsourcing provider to manufacturing companies, the company sees advantages realized with those that they are able to partner with versus those that hold them at arm’s length or push back on ...

    by Kelly Barner
    Thursday, 23 July 2015
  • Keeping Procurement Moving at the Speed of Modern Communications

      In fact, recent research found that instant communication channels are both feeding our need for ‘in the moment’ action and also making the problem worse. As reported in the Telegraph, “Researchers surveyed 2,000 participants in Canada and studied the brain activity of 112 others using electroencephalograms. The results showed the average human attention span has fallen from 12 seconds in 2000, or around the time the mobile revolution began, to eight seconds.”   Now, whether or not you know what an electroencephalogram is, the message is clear. In 15 years, we’ve lost a third of the length of our attention span. To put today’s available focus period in perspective, the Telegraph also offered up that “goldfish .... are believed to have an attention span of nine seconds.” Unless you are in the business of buying goods and services from goldfish, it is wise to consider the speed of the overall sourcing process and all of the activities that are a part of it.   The ...

    by Kelly Barner
    Wednesday, 22 July 2015
  • How much should a procurement process vary by company or category?

    (A) Barnes and Ayars: Strikes me as being very demand management conscious. All of the investment in understanding root and alternative causes after identifying the need but before making a decision suggests to me that if the need is proven to be justified, it is less important who is selected as the supplier. (B) Bunn: Feels more like an ongoing or long term category management strategy than a process that would lead to the selection of a supplier and the signing of a contract. (C) Cardozo: This process is interesting because it results in a test cycle rather than a contract. It might be appropriate in a capital equipment purchase that is for one need or location but which might be repeated in the future at another site. (D) Choffray and Lilien: Reads like the process I might use if I were selecting a third party service provider for a strategic outsourcing deal. The up front, detailed investment in understanding constraints and requirements sounds like a self-discovery process, ...

    by Kelly Barner
    Wednesday, 22 July 2015
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“When you are open to share what you know with other people, good things will happen for you.” –Soheila Lunney 

Throughout the month of May, Buyers Meeting Point is covering ‘The Procurement Game Plan’ through a series of interviews with Charles Dominick and Soheila Lunney – both about our questions in response to the book and the trends they observe in supply management as a whole. Our original intent was to interview them about the book, but as we got further into conversation, we found that it was impossible to separate the content of The Procurement Game Plan from their ‘day jobs’. This book is not a retrospective look back or an encapsulation of their careers, but a snapshot from two very dynamic contributors to the procurement community. I highly recommend it as an addition to your professional library.

Our review of the book is available, and last week we shared a Q&A with both authors specifically related to our questions about the book. This week we’ll share the first half of our interview with Soheila Lunney.

SLunneyIn addition to being an author, Soheila is president of the Lunney Advisory Group, a provider of coaching and mentoring for procurement professionals in various industries to improve their processes and practices, to significantly reduce the cost of acquiring products and services, and to contribute to the bottom line profitability of their organizations.

Buyers Meeting Point: As a procurement educator and coach, what is your perspective on the typical character or personality of purchasing/procurement professionals and how well that is suited to the future requirements of the role?

Soheila Lunney: As more and more universities are offering Procurement and Supply Management courses and degrees, I see the character of procurement professionals is changing with much higher caliber individuals in various industries.  Procurement employees are truly becoming a group of professionals who are gaining the respect of top-level management.  Leaders of the organizations must support creating an environment that their procurement staff can grow, learn new and emerging best practices, and expand their horizon.  As economy is improving allocating funds to provide training for procurement staff should become a high priority for management.

 

BMP: How did a background in the pharmaceuticals industry prepare you to help procurement professionals in other industries learn to manage supply chain risk?

Soheila Lunney: While it is true that pharma may be ahead of other industries in their assessment and handling of risk potential (due in part to government regulation), industry does not matter. What matters is interaction with the outside world, while includes the health and safety of customers and associates as well as the reputation of the organization.  Whenever possible, tap into tax, legal, and treasury (for example) for their guidance. Come up with approaches that bring safety, security, and contingency plans to the organization. Keep abreast of what other organizations are doing, benchmark against them, and implement practices that can safeguard your organization against unexpected events.

 

BMP: It seems that one of the barriers to procurement having an established seat at the executive table stems from a lack of financial knowledge. Do you see that in the companies that you work with?

SL: Yes – I do see groups and individuals struggling with their lack of comfort with finance. I think it breaks down to two issues: the first is a genuine weakness with financial topics. If this is your situation, you need to acknowledge the weakness and take a class that  can satisfy your needs. The other issue looks at negotiating cost savings v. reporting those savings to the rest of the organization. The most common mistake procurement makes is reporting project savings in one big number. It is critical to itemize results as much as possible to establish procurement’s credibility by creating opportunities for explanation and demonstrating knowledge of the product/service in question.

It is also important to understand the methodologies that your finance group or controller will buy into and structure results reporting to match them. Each company or industry is different, and contract results may change over time due to M&A activity or leadership’s decisions. It is also important to make sure that multi-year contract savings hit the budget for all applicable years. This will require a joint internal effort, but will bolster procurement’s relationships with other departments.

Next Thursday we will share the rest of our interview with Soheila, and on May 31st we will finish up our series on ‘The Procurement Game Plan’ with our interview of Charles Dominick.

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