I’m presenting on an Iasta webinartaking place tomorrow (Wednesday) at 11:00 AM ET. The topic of my talk is will focus on strategies for going beyond the basics to enhance procurement’s value. Given the current market environment, I will preface my arguments with the need to think beyond just the basics to deliver value to the business. Further, improving procurement’s value to the business requires embracing new sourcing-related tools (contract management, supplier management, etc.) wrapped around basic strategic sourcing activity and services spend knowledge to engage the business and drive additional savings.
There are ten ways (outside of transaction-related focus areas) that we see to deliver this new value. A number of these will be old hat for frequent Spend Matters readers. But hopefully I’ll touch on a few which most organizations are not pursuing yet. The 10 strategies I’ll be discussing are:
- Going beyond basic eRFX and reverse auction capabilities
- Connecting sourcing activity to contracts — implementing savings faster and managing compliance
- Going beyond the contracting basics
- Investing in capabilities to support basic supplier management activities
- Leveraging supplier management initiatives to drive advanced cost and risk reduction
- Going hunting for big category game (even if there are anti-poaching types defending their territory)
- Embracing specialists and specialty tools for advanced services categories
- Partnering with suppliers in creative ways and focusing on total cost
- Tracking implemented savings, cost avoidance and results from a finance-driven perspective
- Deploying commodity management programs alongside sourcing activities
Of these I’m hoping the one that got the most attention was the least politically correct (big game hunting). I found a great picture of elephant hunters (along with their trophy) as a metaphor for this one. For big game categories, I will discuss the importance of combining sourcing, contract management, compliance and transactional management together rather than focusing on any one area on its own. What are big game categories? Big game categories are ones that can get you in trouble if you don’t pursue them well. Consider them the equivalent of a rhino that could easily turn you into the hunted if you make a mistake. These include: marketing, legal, accounting, consultancy, BPO and outsourcing spend.
Big game categories can include direct spend as well. Here we recommend pursuing direct materials spend in new ways rather than just pursuing a standard sourcing process. This may include working with suppliers on alternative specifications, demand aggregation, commodity management/hedging and fostering supplier-generated innovation.
Following my presentation, Joanna Martinez, Executive Managing Director, Chief Procurement Officer, Cushman & Wakefield, has pulled together some real substantive insights on the same topic based on their own experience. Curious? Join us Wednesday. You can register on the Iasta site.