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I read a very startling article this weekend on SupplyManagement.com. A recent study across 550 financial directors and CFOs from large organizations in the US, UK, Scandinavia, Germany, Spain, Belgium, the Netherlands, Luxembourg, and France found that only 17% of CFOs believe procurement heads deserve a place on the company board.
That’s right, 83% of CFOs surveyed essentially believe — to quote Adrian Done, a professor at the Navarra IESE Business School and supply chain expert, that procurement deserves nothing more than a “kick in the face“. Ouch. At a time when their top priority is to save money, this is how they view procurement? Let’s hope their replacements, when they eventually get fired or laid off when company performance goes down the drain because they did the usual blind cut across the board which irreparably damaged the business, are smarter than this.
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Last week, SupplyManagement.com published a 5-page article on E-Sourcing Made Easy. Done right, e-Sourcing IS Easy, and if it takes 5 pages for you to make that point, you’re doing it wrong. Especially when you spend 5 pages explaining that:
- among some people, e-Sourcing has a bad rap you’ll need to overcome
- that you should start small and manageable and work your way up
- that you should have buy in from key stakeholders before proceeding with an e-Sourcing event
- that marketing spend is a prime candidate for cost reduction, but that you’ll have a turf war if you don’t approach it carefully and collaboratively
- that temporary labour is another prime candidate for cost reduction, but that you’ll have to do a lot of preparation to understand the category before you can proceed with an event
- that health care buying is another prime opportunity, but that you might get push back from professionals worried about quality
- that many areas of professional services, such as legal, are also ripe
which I just explained in a paragraph, and then proceed to spend no time at all on the actual implementation steps that make it easy. So here is a simple 5-step process to make e-Sourcing easy:
- Identify your biggest opportunities.
Bring in a consultancy that is an expert in spend analysis to help you identify where you have the most cost reduction potential.
- Identify the negotiation processes likely to give you the most savings.
Multi-round sealed bid e-negotiation? Open Auction? Decision Optimization? e-Procurement with price enforcement?
- Select a best-of-breed SaaS provider that has those capabilities.
And insure that it is supported by third party consulting firms with category experts.
- Bring in a cost reduction consultancy with category experts.
Contract them to manage the projects for your top five savings opportunities and have them train you on how to use the system to implement the proper processes as the projects progress.
- Retain the consultancy in an advisory role on your next five to ten projects.
That way you can be sure you learn the system, and processes, right.
That’s it. Then you’ll be ready to run your own projects and save every time.