The Seven Grand Challenges for Supply and Spend Management cross-blog series has come to an end. We had some great posts, including those from front-runners Bob Ferrari of Supply Chain Matters and the Strategic Sourceror of The Strategic Sourceror, but participation was low this time around, compared to back in January when I gave everyone a chance to jump on the Sustainability band-wagon and I could barely keep up with the submissions that came fast and furious. And yes, I’m a little disappointed. It’s our job as bloggers to help define the future, and I thought doing so was something all of us bloggers liked to do. But anyway, back to the matter at hand.
Jason Bush of Spend Matters decided to tease us in hist post and only give us his top three challenges last week, and make us wait for the rest. His top three were:
- Procurement Integration
According to JB when it comes to true integration with the business such as enterprise level involvement in budgeting and planning (a favorite Hackett Group KPI), most procurement organizations are still coming up woefully short. Based on my own experience, I’d have to agree. But is this a supply management challenge, a broader operational challenge, or an education challenge?
- Risk Management
Couldn’t agree more. I think we’ve both had lots to say on this topic over the past few years.
- Spend Management Led Innovation
As proof that supply can drive innovation throughout the business, JB gives us the automotive case of how Honda and Toyota helped redefine the basis of innovation through working more collaboratively with their supply base to engineer out cost as an example. But I don’t think this is the challenge, I think the challenge is educating the rest of the organization about the innovation that spend management can bring, as there are a growing number of examples of leading procurement organizations becoming the innovation leaders in their company.
Mark Usher of 1 Procurement Place went all out in his post and laid his seven challenges on the line for our critique. They were:
- The Strategic Elevation of Procurement
Mark, like almost every other contributor, also insists that procurement strategy must be an integral component of corporate strategy. I’ve been saying that for years, so I have to agree.
- Achieve a Truly Seamless Cross-Functional Strategic Sourcing Process
Considering that many organizations still don’t get that it’s Sourcing AND Procurement, I definitely agree with mark that we DO NOT need another seven-step consulting methodology. ( If you think we do, maybe you need a twelve-step program! ) Mark’s right when he says that procurement in any given organization needs to reach a state where the right organizational players are facilitated smoothly into the strategic sourcing process at the exact time that their respective value-adds are required.
- Optimize the Outsourcing of Indirect Materials
Well, I definitely like the word optimize. But I think the goal should be to optimize the outsourcing of those tasks that can be better done by someone else and to optimize the insourcing of those tasks that can be better done in-house. No need to be discriminatory.
- Pursue Enterprise-Wide Spend Visibility
Definitely! This fits right in with my challenge of Opportunity Analysis – and you certainly can’t identify opportunities without good visibility into what they are.
- Pragmatically Manage All Elements of Supply Risk
Mark says that Personally, I see a little too much talk of virtual reality dashboards and not enough about what is really important! Hear, hear! Glad someone got my message that dashboards are dangerous and dysfunctional!
- Maximize the ROI of Sourcing and Procurement Technology
Well, this is definitely a challenge, but I think it’s too broad to be useful. We need to identify what can be done to maximize the Sourcing and Procurement ROI, and then solve those challenges.
- Make Procurement “Chill” or “Tight”
According to Mark, who’s lingo is probably a bit behind the times since I understand it, the supply management profession must make itself attractive to young, degreed job seekers who would typically shun a career in Procurement for something more Generation X/Y such as, well, almost anything really. Well, that’s why we have to talk about Corporate Social Responsibility and Sustainability and why only Procurement can truly achieve it, since Procurement is the part of the company that spends the money, and, plain and simple, Money Talks.
- Lust: Demand Management
No matter how good you are at negotiating, you’ll still never beat the buyer who figures out how to achieve their business ends without buying the product at all.
- Gluttony: Lean
The challenge for procurement professionals is to master existing methodologies such as lean to influence demand for products and services.
- Greed: Fair Play
Greed can manifest itself in a supplier taking advantage of a buyer … or it can manifest itself in a buyer with significant market value tearing the throat out of their supplier’s margins. The challenge for the procurement professional is distinguishing one situation from the other and managing the stakeholders on both sides.
- Sloth: Contract Management
The most valuable skill that a supplier can cultivate in its relationship managers is the skill of getting a customer to roll a contract over.
- Wrath: Supplier Relationship Management
When a relationship has soured to the point where either the buyer or the supplier is willing to risk supply disruption to extract their pound of flesh, a procurement professional can play a role in keeping the relationship on life support long enough to either revive the corpse or replace the supplier.
- Envy: Lack of Respect for the Purchasing Profession
Procurement professionals, as expert purchasers, can assist the business in differentiating true opportunity from fear-driven me-too opportunities.
- Pride: Talent Management
The core challenge that must be met to meet the previous 6 challenges is attracting and keeping people who are capable enough to meet these challenges.
So where does this leave us? With a lot of work to do!
Thanks again to:
- Bob Ferrari of Supply Chain Matters for his posts
The Seven Grand Challenges for Supply Chain Management – Part One
The Seven Grand Challenges for Supply Chain Management – Part Two
The Seven Grand Challenges for Supply Chain Management – Part Three
- The Strategic Sourceror of The Strategic Sourceror for his post Challenges in Supply Chain Management
- Jon Miller of Gemba Panta Rei for his post
The Seven Grand Challenges for Supply and Spend Management in the Next 25 Years
- Ron Southard of Safe Sourcing for his post
Where technological focus can improve retail procurement
- Randy Littleson of The 21st Century Supply Chain for his post
Seven grand challenges for spend and supply chain management
- Justin Fogarty of Supply Excellence for his post
Spend Management 3.0 and Beyond …
- Jason Busch of Spend Matters for his post
Spend Challenges – Today and Tomorrow
- Mark Usher of 1 Procurement Place for his post
Seven Grand Challenges for Supply and Spend Management
- Bernard Gunther of Lexington Analytics for his post
Opportunity Analysis: The Challenge is Having Accurate and Usable Spend Information
- Doug Hudgeon of Vendor Management for his post on the
Seven Deadly Challenges