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Articles in category: Spend Analysis & Benchmarking
We’ve seen many years of debate over the best way to organise procurement within complex organisations. And the question of whether it is better to centralise or decentralise, hold or devolve power, is still one of the most heated talking points among procurement executives. Now, technology has evolved to a level that means we may no longer need to choose between one or the other, or indeed try to make both models fit where an organisation has a siloed, category-led structure in place.(Read Full Article)
Technology purchasing is rarely a transparent process, especially when it comes to IT professional services. Despite the seemingly tidy packaging of hourly rates (as compared to, for example, complex licensing programs for software purchases), the risk of overspending is high. While much of this unplanned spending can be attributed to delayed project timelines and unforeseen circumstances, a large portion of it is caused by mistakes on the front end of the contract negotiation process.(Read Full Article)
The immense promise of big data to reveal new opportunities and deliver practical business results has so far been focused on technologies and models, and less on the human challenges of staffing roles and processes to take advantage of big data’s promise. The technology may be abundant, but developing, recruiting and hiring the people to use it is becoming an acute challenge for Fortune 1000 companies.(Read Full Article)
I’ve spent a good amount of time reading and rereading the KPMG paper, FUTUREBUY: The Future of Procurement – 25 in 25, an analysis of where the procurement marketplace is headed. Based on interviews with 25 procurement executives, the paper offers a look at the future of the function and the type of individuals that will thrive in it. One prediction in the paper is the rising role of procurement as “financial analyst” in the future. This is an observation with which I could not agree more.(Read Full Article)
In the not so distant past, a supply chain was simply the road from a farmer’s field to the market. Fast forward to 2014 and the picture has changed completely. Supply chains are now extremely complex global networks, strained by increasing consumer demands. The simple A to B path has been replaced with interdependent routes involving many suppliers, intermediaries and localities.(Read Full Article)
What’s your biggest IT concern in 2014? Security? Spending? BYOD? For many enterprises, the answer is “all of the above” thanks to stealth IT purchases and implementations across the organization. Shadow IT – the unsanctioned, decentralized technology spending that happens in business departments every day – will be a force to be reckoned with in 2014.Experts estimate that shadow IT spending in the average enterprise business amounts to as much as 20% of the entire IT budget. Thanks to BYOD and the cloud, it is easier than ever for employees and departments to run their application of choice on their ...(Read Full Article)
Finally, spend analytics tools and data management will break into the 21st century. Those who know who they spend with will finally understand what is spent and even when it will be spent again. After years of false dawns why might this finally happen in 2014? We have seen (finally) a surge in recognition data has to be the starting point of any good procurement exercise and investments are being made accordingly.(Read Full Article)
More than eight out of 10 firms say category management is a top priority for procurement, a survey has revealed. Future Purchasing’s Category Management Study found 85 per cent of companies thought category management was a top-three priority.
However, just 2 per cent rated their use of category management as excellent, with a quarter of respondents describing themselves as “leaders” and the rest as “followers”.
The study revealed that a fifth of followers, defined as those who described the level of category management in their organisation as basic or improving, had no measure of savings. This compared with leaders ...(Read Full Article)
Firms are 'flying blind' on global supplier data. Research by The Hackett Group covering more than 100 companies found less than 30 per cent have “near real-time visibility” of supplier base spend volumes, and less than half have the same level of visibility into customer information and business volumes. Only around a quarter had similar access to financial performance and forecasts.
Conversely, “globalisation leaders” had access to this information almost 80 per cent of the time on average, with automation “one key strategy” to achieve this.(Read Full Article)
E-procurement software provider SciQuest has bought competitor CombineNet in a $43 million (£27.5 million) deal. SciQuest said it acquired CombineNet because the company’s software represents “the best solution in the advanced sourcing arena”. Both firms provide cloud-based business automation systems for spend management, but CombineNet’s proprietary technology “optimises and evaluates complicated vendor bids and proposals” and allows scenarios to be run balancing facts including cost, risk, timing and value. It is primarily designed for Forbes Global 2000 companies. SciQuest said the deal would give the firm a tool that improves decisions for spend categories “that are typically ...(Read Full Article)
The news that OB10 is to go public broke last night – actually a little prematurely – but now it’s official and Tungsten and OB10 have announced their intentions. Pete Loughlin spent 20 minutes on the phone with a delighted Luke McKeever, OB10′s CEO, to understand the details of the deal that values OB10 at £99 million.
IT outsourcing isn’t what it used to be – at least that’s the message the industry is projecting as we enter the second half of 2013. Many industry experts have preached about “the death of IT outsourcing” as the cloud transformed the IT ecosystem and enterprise capabilities and CIOs became fed up with poor results and projects that run well over budget. But while these issues have made many IT and sourcing executives think twice about outsourcing, the reality is that IT outsourcing (ITO) isn’t going away. The pressure to deliver complex projects in tight timeframes still lends ...(Read Full Article)
That “Global IT spending is growing, albeit cautiously” was the message shared by Gartner in their IT Spending Forecast, 2Q13 Update. While the analyst firm previously predicted a 4.1 percent growth in IT spending this year, they have lowered expectations to 2 percent for a total of $3.7 trillion. The caution can be chalked up to instability in U.S. dollar exchange rates and declining PC sales, which isn’t exactly surprising. Between fiscal policy debates and global economic instability, not to mention the death of the desktop, the impact on IT spending is evolving in real time ...(Read Full Article)
Finding and extracting value from sourcing activities is becoming ever more challenging. Suppliers know all too well that buyers will try and negotiate the best deal and sourcing teams are under more pressure than ever before to extract savings and efficiencies from the supply chain. A tried and tested method of extracting value from sourcing initiatives is a structured Sourcing Opportunity Analysis. This process, adopted by Bespoke, has realized meaningful savings and supply chain efficiencies on the sourcing projects we have worked on.(Read Full Article)
Unlike many organizations that use spend analysis as a tool to drive supplier rationalization, FMC Technologies is not looking to reduce its supply base. Rather, their focus on building visibility into spending and supplier performance centers on standardizing and deepening relationships with their strategic suppliers worldwide. Some of the data points they leverage in this hybrid spend and performance analysis include quality, on-time delivery, open purchase orders (POs), forecasts and supplier risk information.(Read Full Article)
The seasonally adjusted Kagiso Purchasing Managers’ Index (PMI) remained unchanged at 50.4 in May, indicating that the sector is struggling to gain any real momentum, according to figures released on Monday. Kagiso Asset Management head of research Abdul Davids commented that, although the headline number was flat, the index’s two largest-weighted subcomponents lost ground over the period, as conditions in the manufacturing sector remained challenging.(Read Full Article)
In today’s business world, data is a valuable corporate asset which, when managed properly, can support a company’s ability to achieve strategic goals and financial results. A recent Hackett Group study revealed that over 70% of companies are planning on implementing a Business Intelligence or analytics application. In addition, these same companies are planning to establish data stewardship rules, standardize master data, and cleanse existing data, all components of a Master Data Management (MDM) strategy. Executives can improve their ability to quickly access accurate data by adopting MDM best practices.(Read Full Article)
Procurement Cards (P-Cards) are rapidly gaining acceptance in South African business circles as an efficient way of managing spend with company-approved vendors on low-value/high-volume transactions. When implementing a P-Card programme within your company there are a few things that should be noted, advises Kgomotso Ntsimane, Marketing Manager for Nedbank Corporate Issuing, in this month’s SmartProcurement. "P-Cards afford greater visibility of what is being spent and, as a result, greater control and a lesser chance of abuse. A P-Card programme allows the company to see where purchases are made in a convenient, central electronic location. This allows for consolidation ...(Read Full Article)
This SnapShots survey resulted in 148 useable responses from companies representing 25 different industry sectors. A majority of the participants (87%) reported they employ supplier qualification processes that include steps necessary to become a qualified supplier, About 75% of the participants have different supplier requirements for different commodities, products, and services. Appendix A to the benchmarking report lists the different supplier selection and qualification processes reported. CAPS Research corporate and benchmarking program sponsors have access to the breakout reports: Aerospace & Defense, Financial Services, Industrial Manufacturing, Petroleum (Oil & Gas), and Utilities.(Read Full Article)
Like MRO, packaging, and logistics, the marketing category straddles the boundary between direct and indirect spend. And we all know (or so marketing folks claim) that it has a substantial impact on sales – allegedly, at least! The direct commercial impact is notoriously difficult to assess, although a new breed of analytical-driven spend analysis tools targeted specifically at marketing spend (e.g. cross-channel, competitive insights, etc.) and campaign performance can help.(Read Full Article)
This series of posts is based on content, ideas and recommendations from the following Spend Matters Perspective: Making Sourcing Savings Stick: New (and Not-so-New) Strategies to Drive Savings Implementation.
Based on our experience, we can trace the savings bottleneck back to a number of key challenges. These are: Insufficient resources--organizational resources are generally allocated to other projects..................................(Read Full Article)
By performing a benchmark you are able to answer: Do you have a competitive advantage? What are your strengths and weaknesses in the purchasing function and where should you direct your efforts to improve? Either doing benchmark one-to-one (your company with another company) or one-to-many using third party entities, you need to define the benchmark framework.(Read Full Article)
Spend Matters welcomes a guest post from Mason Lee, Manager, and Matt Kucharski, Sr. Consultant, at The Hackett Group. From 1983 to 1987, The A-Team delivered five seasons of action-packed episodes to its cult following. The sitcom has left its mark on popular culture through its iconic van and catchphrases. But the creators of the A-Team were unlikely to be aware that they were also providing us with valuable lessons in supplier negotiations.
..(Read Full Article)
Following are the top ten spend analysis reports you need to successfully analyze and act on your business spend. The success of the analysis from these reports will of course depend on the accuracy and the completeness of the data behind the reports.
1. Spend by Category
2. Spend by Supplier
3. Spend by Month
4. Spend by Location
5. Spend by Business Unit
6. Spend by Item
7. Spend by Buyer
8. Maverick Spend
9. Pareto Analysis
10. Opportunity Analysis
Why is this important? Providing a report that is specific to this information allows you to easily make savings ...(Read Full Article)