The Disaster Cycle of Crisis Procurement

One of the aspects of ever-growing experience is the sorrow of knowledge. In times of economic turbulence, procurement could be dragged into a cycle of faulty practices that starts well before the cri...
Continue reading
  2084 Hits

Pay Procurement and Supply Chain Professionals by Multiple Market Basket Focus Areas

Jack Welch once noted that the only two departments that drive revenue directly to the bottom line are sales and procurement.  He noted that the other departments were basically overhead. I would also include supply chain professionals in this revenue generating group.

Continue reading
  2995 Hits

What Procurement Wants: Manufacturing Executive Roundtable

Leaders of procurement teams at manufacturing and process companies are decisive. They know what they want in a supplier. They want a supplier with a similar culture and competitive quality, service a...
Continue reading
  3301 Hits

The Procurement Conundrum: Savings or PR?

These are tough times to be in business. Costs are rising but selling prices are not, mainly due to global competition. The arithmetic is simple: profits are being squeezed. Finding ways to drive down costs lower than your competition's has become more important than ever – but value and customer service can’t be ignored either.

I like to take an approach to supplier negotiations that I believe will help you gain an edge in these tough times. It starts by finding an answer to the ‘procurement conundrum’.

Many procurement pros are handicapped by having to wear two hats:

First there's the tough-negotiator hat. Driving down costs is a fundamental part of the job; that's why we spend so much time negotiating.

Then there's the good-relations hat. Production requirements and customer needs are constantly changing. Procurement needs suppliers to react quickly to fluctuating demands. As a result, we need to cultivate give-and-take relationships to make sure this happens.

It's easy to see how the two ‘hats’ conflict. Imagine phoning a parts supplier on Friday to coax him into running an unscheduled weekend shift, then on Monday asking for a better price. It’s hardly a recipe for long term success.

Continue reading
  4435 Hits

Book Review: Expensive Sentences

“We can spot an Expensive Sentence by its impact. Expensive Sentences limit information. They end conversations. They create urgency and isolation. They reduce options. They steal choice.” (p. xviii)

Expensive Sentences: Debunking the Common Myths that Derail Decisions and Sabotage Success by Jack Quarles (Ideapress, 2017) accomplishes two amazing things in one highly readable book:

  1. It provides procurement with an approach to managing ‘creep-in’ costs that has the potential to become viral on its own, as long as procurement is ready to lead the way, and
  2. It serves as a benchmark (in my opinion) that procurement’s brand image has made huge strides – and that we are being rewarded with a book that is both savvy and cool.

Expensive Sentences is about the power of spoken language. You may not be aware of it, but some of the most common sentences aired in your company on a daily basis are costing you money.

Continue reading
  7290 Hits

4 Buyer Types: Bureaucrat, Cost Killer, Innovator, and Business Developer

Can buyers create value for customers and reduce costs?

 

The two main objectives of a buyer in most organizations are:

  1. Reducing Total Cost of Ownership (TCO) or Life Cycle Costs (LCC)
  2. Creating value for Intermediate or Final Clients

 

Reducing Total Cost of Ownership or Life Cycle Costs

Often involves lowering prices, but not always; sometimes to save more you need to spend more on a per item basis. If you buy a razor for $1 and you can use it for 10 shaves, it is 100% more expensive than a razor for $2 that you can use for 40 shaves. This example is simple but true and captures the distinction between price and cost.

Sometimes involves reducing unnecessary or excessive consumption (i.e. waste). If companies roll out a course that trains employees with company cars to drive more economically and ecologically, it is possible to save money. A trained driver whose vehicle only consumes 7 gallons of fuel per 100 miles instead of 7.7 allows the company to reduce their fuel costs by 10% (excluding the costs related to the training, which are to be deducted).

Continue reading
Recent Comments
Guest — CleanMark Labels
This was a great article! Love how you define a ladder, in a sense, showing the potential that a buyer can aspire to. It's a great... Read More
Thursday, 26 October 2017 16:05
  5474 Hits

Recommended Procurement Webinars for June 26-30: Picking up the Pace, Unprecedented Savings, and an RPA Case Study

If you’re thinking of attending a webinar this week, don’t hesitate. With the July 4th holiday in the U.S. next week closing most companies on Monday and Tuesday, the events calendar is a ghost town. Click on the title of each webinar below to view the full description and register.

BTW: If you haven’t already, sign up for our mailing list to be sure you get my weekly recommendations in your Inbox each Monday.

Continue reading
  5143 Hits

Recommended Procurement Webinars for June 19-23: Hidden Savings, S&OP, and Services Complexity

In addition to the live events below, Odesma is hosting a live event in London, “Making Procurement Transformation Deliver.” Confirmed speakers include Harry Wiltshire, Professional Athlete, Market Dojo, Provalido and Procurement PeopleCloud. Click on the title of each webinar below to view the full description and register.

BTW: If you haven’t already, sign up for our mailing list to be sure you get my weekly recommendations in your Inbox each Monday.

Continue reading
  4712 Hits

Recommended Procurement Webinars for May 15 - 19: Moving Beyond Price, Applying Watson, the Amazon Effect

Procurement Leaders’ World Procurement Congress is ‘in session’ this week in London on Tuesday and Wednesday. If you’re looking for a virtual event to attend, my picks for the week’s best webinars are listed below. Click on the title of each webinar below to view the full description and register.

BTW: If you haven’t already, sign up for our mailing list to be sure you get my weekly recommendations in your Inbox each Monday.

Continue reading
  5061 Hits

Why telecom companies don’t want CPOs to know about TEM

Mobile devices are now part of the modern business uniform. Mobile phones created a culture of always available, but mobile devices enable constant connectivity. What telecom companies don’t want CPOs to know is that bundling voice, data, and devices with them is no longer the most effective way to manage telecoms spend.

Continue reading
  4973 Hits

Recommended Procurement Webinars for October 10-14

This week, my recommended procurement webinars are all about doing MORE. More categories managed, more results, and more visibility into the supply chain. Click on the title of each event below to view the full description and register or visit the BMP events calendar to see what’s on tap for the rest of the month.

 

Continue reading
  3626 Hits

Procurement’s (Not so?) Finest Hour

Procurement is undergoing a transformation, moving away from process and price and towards undertaking initiatives that demonstrate value for the business. Therefore, when the opportunity arises for procurement to demonstrate its value, you would expect them to seize it in both hands… or maybe not!

We want to share with you a real life situation undertaken this month. We have removed the names of those involved to limit embarrassment; both company names are fictitious, but the scenario is real.

 

Continue reading
  5489 Hits

Should procurement be paid commission?

It is not uncommon for procurement to receive a bonus payment based on the savings the department has achieved. In this post we discuss if procurement would benefit more from being on a salary plus commission payment structure.

AFTER READING, TAKE OUR TWITTER POLL: Should procurement be paid commission?

The traditional approach for calculating pre-contract savings is to obtain a minimum of three supplier quotes, select the mean as the base point then count the additional savings achieved above the base point. The challenge for the CFO is because the savings are subjective, they are unable to truly identify tangible and quantifiable savings from procurement’s impact, therefore the level of bonus they might apportion directly to procurement is limited.

Continue reading
  4854 Hits

The Legacy Telecom Disadvantage

How often can you find 80% savings in your telecom bills? When it comes to legacy services, more often than you’d think! In all industries there are mergers and acquisitions: Telecommunications and Te...
Continue reading
  4325 Hits

Continuous Cost Reduction for Direct Materials

Continuous cost reduction in the manufacturing industry is a supply chain best practice, but all too often it is mistakenly seen as unsustainable by strategic sourcing and procurement departments. For many companies the question is, ‘how can I reduce costs while limiting the impact on quality?’ Before jumping right to substituting materials, there are other options for delivering cost savings - yes, even over time.

Continue reading
  8328 Hits

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 worke...
Continue reading
  3226 Hits

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

Continue reading
  3565 Hits

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.”

Continue reading
Recent Comments
Guest — Dr. Tom DePaoli
I would state that the science part is becoming much more sophisticated and in real time. Purchasing professionals need to make su... Read More
Monday, 21 July 2014 11:37
Guest — Kelly Barner
Thank you Dr. Tom - it is always good to get your perspective. Your breakdown of the art/science aspects of procurement makes ve... Read More
Monday, 21 July 2014 15:13
Guest — BU school of Management Graduate (Norwegian Program)
I would argue strongly that yess, currently the old "relationship" dinosaurs are ruling the planet. However, information technolog... Read More
Wednesday, 23 July 2014 21:29
  3783 Hits

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.

Continue reading
  3340 Hits

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.

 

Continue reading
  3527 Hits

© Buyers Meeting Point. All rights reserved.