Daily Archives: January 11, 2007

Catching up with Aberdeen

When I was in Boston, I took the time to visit with some of the Supply Space Focussed Aberdeen folks to talk about the sourcing & procurement space and what the year ahead had in store for us. (Since I have been told by ex-analysts that their CEO despises us blogger types, even those who generally say good things about the quality of content coming out of Aberdeen, I will not give names, dates, or conversation specifics to protect the innocent, but simply say they are really great, smart, people.) If you’re interested in the nitty-gritty, you can always start by downloading their research agenda, but I can tell you that their plans go well beyond that.

First of all, they plan to continue the aggressive research schedule institutionalized by The Great Sudy in his short tenure (who averaged close to one major study a month) across each of the channels that they address. Secondly, they plan to augment those major benchmark studies with a significant number of shorter insight and thought pieces focussing on specific issues and / or best practices that you can use to improve your overall supply chain operations. (Apparently their goal is 10/month. Wow!) Thirdly, they plan to delve into a number of the insights that came out of the CPO conference in November and break ground in the relatively untouched areas of supply chain finance, next-generation supplier performance management (SPM), and non-traditional industry verticals. All I can say is that if they do all this, AMR will have some serious work to do keeping up.

Now I know that some prominent individuals have questioned Aberdeen’s relevance in the mid-market at one time or another, and some have even had some valid points, but the following truths hold: (a) if its good for big business, then some elements will certainly be good for medium-sized businesses, since it is essentially impossible for a business with poor practices to get large or stay large in today’s ultra-competitive market and (b) the data is based on your responses and any survey with a large number of respondents is going to contain a relatively significant number of responses from the mid-market. Yes, you might need to take some of the results with a grain of salt, or, more appropriately, with some good consulting advice from those companies that have helped similar companies undertake similar initiatives, but it’s much better to have valid data and supported conclusions to start with then to start with no data at all. So I say: Go Aberdeen Go! and continue to break ground in the analyst space. Right now, the issues need all the attention they can get – and given that the current talent pool, although not as well known, is more talented than they are being given credit for, one can be sure the research is only going to get better and better.

So participate in their surveys, get your free research, and make informed decisions. Furthermore, if you have ever attempted advanced sourcing, be sure to take their Advanced Sourcing Survey. Their last benchmark study in this area found that companies employing advanced sourcing techniques saved on average 12% more than their competitors who did not. This study is going to delve deeper into the issue and help you determine which technique will help you the most. It’s worth your time.

Don’t Buck the Brand

A few months ago, CPO Agenda published an article entitled Backing the Brand that stated aligning procurement and supply strategy with brand building and marketing is vital for long term success. A couple of weeks ago, the Frasers/PMAC Newsletter published the article Wising up to Marketing Costs that stated that marketing seems to be one of the final frontiers in strategic sourcing and that some companies are using sound strategies to save millions of dollars on marketing, without missing deadlines or diluting the creative intent. In other words, not only can the logic work with the magic, as outlined in my Magic & Logic Posts (Part I and Part II), but that Procurement can Back the Brand profitably.

Backing the Brand states that a successful brand can

  • differentiate a product or service
  • enhance a product’s competitiveness
  • influence the price-elasticity of demand
  • ease the introduction of new products and services
  • create customer recognition and loyalty
  • enhance leverage over upstream and downstream supply chain partners
  • create long term shareholder value

In addition, it states that even though procurement and supply chain may not always dictate a successful advantage on their own, it is clear that differentiation and customer retention might be impaired if they are not aligned with marketing and brand strategies and that only those organizations that can institutionalize continuous cross-functional implementation of a linked brand and sourcing strategy are likely to be successful in the future.

The article then goes on to offer five steps to successful alignment, as well as three case studies of organizations that have succeeded in successfully linking procurement and marketing and three organizations that have failed, but like other articles extolling the virtues of a procurement and marketing partnership, it skips over the simple first steps to success.

That’s where the article Wising up to Marketing Costs comes into play. It describes how your procurement department can make use of a category specialist model for buying and outsource acquisition of marketing categories such as print management that not only costs large organizations millions of dollars annually, but often costs those same organizations in excess of a million dollars of unnecessary spend. It also describes how the deployment of eProcurement solutions can save you money while giving Marketing the speed and flexibility they require. 

So Back the Brand – and be the only department in your organization to have a double impact on the balance sheet. Make Charles proud.