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Buyers Meeting Point is home to two blogs: The Point is written by BMP's Kelly Barner and a diverse group of guest contributors. MyPurchasingCenter was acquired by BMP in 2020 we now showcase their content archive on BMP.

Procurement Problem Solving

TRIZI won’t rehash the full approach here, for that you can read today’s excerpt on our site or on the eSourcing Wiki, but there are three key take-aways worth calling out, and giving more thought to.

1. You can’t solve a problem until you know what it is.

Since TRIZ is a scientific method, the expectation is that all problems will be stated with a very high level of detail and specificity. If you are facing a challenge in a category of spend, being able to drill down to the very smallest and most measurable level best positions you to resolve the issue.

Even if you are facing a tough project objective, this approach may be useful. If you set out with an objective no more specific than to ‘reduce spend’ your actions are likely to miss their mark. How much spend? Over what period? On what categories/items/services? Make sure that whatever project reporting or documentation you put together forces you – and your stakeholders – to clearly articulate challenges and objectives in such a way that everyone will know if goals have been met by the solution put in place.

2. Over 90% of all problems have been solved before.

The ‘father’ of TRIZ, Genrich Altshuller, originally came up with the approach by screening patent applications to see how many were truly innovative. What he found is that only 20% of all patents had somewhat innovative ideas in them. When he took his examination further, ranking the somewhat innovative ideas by just how innovative they were, just 4% contained new concepts and only 1% were truly revolutionary.

As difficult as your particular problem seems, the probability that someone else has already solved it is incredibly high. Start working through ever-widening circles of contacts looking for someone with the information that can at least jump you ahead in your project. Start with procurement team members and then extend your inquiry to suppliers, solution providers, former co-workers, and members of your professional associations. You may even find that it is helpful to post a question on LinkedIn or start a discussion in a relevant forum.

3. Look across multiple disciplines looking for possible solutions.

One of the findings from Altshuller’s work is that the reason solutions are not apparent to us is because the answer best answer comes from another discipline. What we see as a difficult procurement challenge may be easily solved by someone in accounting or AP. Realistically, we may need to look even further than that. Maybe we are looking for a new pricing model and have to jump industries to find one that fits our needs.

Think of the first company to formally market a “software as a service” or SAAS cost and delivery model. They needed a way to communicate that you will not really OWN anything, which means that your cost equation changes and your payment structure is altered, but without really changing the functionality you receive. They needed to position it in such a way that it drew on something familiar – like services pricing – to instill confidence.

Questions:

What approaches do you find best when facing a difficult challenge? Who in your organization to you go to looking for a solution or a brainstorming partner? Have you been part of a team where a truly new solution was needed – and found?

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Predicting the Future

Have you ever felt you could predict the future? Have you ever been thinking about someone and then the phone rings and it is that person or you bump into them in the store suddenly?  

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My Procurement is Your Beschaffung and Their Approvisionnement

"A rose by any other name would smell as sweet."

 -- William Shakespeare, Romeo and Juliet

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**UPDATED** SAP Purchases Ariba - Now what?

SAP announced an agreement to acquire Ariba for $4.3 Billion dollars. SAP will pay about a 20% premium per share to buy Ariba, and the transaction is expected to be completed by this August. Whether you were surprised by the news or not, there is no question that we haven’t heard the last of it, and the rest of the market has just started to react.

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Mickey Mouse and you

Walt Disney was a genius. That is a given. He has a famous quote. "I hope we don't loose site of one thing - that it was all started by a mouse". And what an empire that has grown into. So when someone says to you that your business is so Mickey Mouse take it as a compliment. We all would love to have a business like the Disney empire! Or at least one that is growing towards that.

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Many Ways to Get Stronger

The recipe for you to get stronger is very well known. You can exercise, eat better and get the appropriate rest. The same is true for organizations. So much time and resources are utilized to grow sales and the top line. Similar attention is focused on how to contain costs. Using all the tools in your toolbox appears to be the key. This week's esourcing Wiki topic is cost avoidance. The article wraps up by talking about the "perfect world" and we know that certainly does not exist.  

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Have you Considered ‘Laundering’ Your Savings?

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.

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It is about the money

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!!

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Reaping What You Sow in Contract Management

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. 

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The Thrilling World of Contract Management

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! 

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The Role of a Sourcing Professional: How Many Hats Should We Wear?

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.

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The Benefits of Optimization

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!

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What is today in 100 years?

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?

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Which Procurement Model is Right for You?

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.

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Optimization: Playing the What If Game

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. 

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Project management - Critical and Underrated

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. 

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eRFx Best Practices Case Study - A Rudderless Boat

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.

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The Softer Rewards of Auctions

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. 

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Lessons Learned Post-tsunami

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.

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The Underutilized Request for Information (RFI)

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.

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