Spend Analysis

What is procurement's future in the 4th Industrial Revolution?

 

Mluleki Ntlemeza.jpgThe fourth Industrial Revolution, characterised by a fusion of technologies that is blurring the Iines between the physical, digital and biological spheres, builds on the digital revolution (known as the Third Industrial Revolution) that has been occurring since the 1950’s, said the World Economic Forum.

'4IR' has seen the emergence of technologies in procurement, which are set to disrupt established methods. Examples are cognitive procurement and Blockchain.

Mluleki Ntlemeza (MCIPS), e-Procurement specialist at PetroSA, unpacks the impact of the fourth Industrial Revolution on the future of procurement in this month’s SmartProcurement.

Forget cost management - think 'value management'

 

value_management.jpgIn tough economic times, management may take a ruthless approach to various areas of the business where they perceive costs as being too high. For example, they immediately cut the marketing budget – when in fact marketing may be more critical than ever before. Or they trim down expenditure on IT systems, when investing in more streamlined IT processes can quickly turn into a cost saving.

Typically, costs within a company are being divided into pure operational costs - but these, in themselves, have massive indirect costs (head office expenses, FICA [for banks], IT, etc.). But in taking this approach, businesses usually have little to no idea of what the true cost to provide their service/product is.

Using data analysis to facilitate achieving the DTI 2013 BEE Codes

 

The 2013 Department of Trade and Industry (DTI) Codes are complex and meeting them will be challenging. For management to make informed decisions and measure progress in achieving transformational goals at business-unit level there must be one version of the truth that is accurate and up-to-date.


The New Codes have raised the broad-based black economic empowerment (B-BBEE) bar for all larger South African organisations: most believe that if they had to conform to the Codes now their BBBEE level would drop at least 2 points for example from 4 to 6


And yet the codes come into force now.

Driving expenditure management excellence with the numbers on your side

 

Mclaren_Mercedes_F1.jpgControlling an 800-horsepower Formula-1 racer by relying on mere arm muscles and foot sensitivity can turn out to be a dangerous exercise, said Michael Schumacher. Similarly, making trusted and confident supply chain decisions requires analytics of more than pencil, paper and Excel spreadsheets, Keertan Rai, of Ariba Expenditure Visibility, tells SmartProcurement.

The Kraljic Model can identify expenditure fit for P-cards

 

KraljicModel.pngAd hoc expenditure is a big headache for any organisation and procurement division: these low-value, high-volume purchases can erode budgets if processed through traditional P2P. While the solution is to introduce a purchasing card (P-card) programme, how does one determine which expenditure to put on a P-card?


A simple and effective way of segmenting your expenditure lies in the Kraljic Model, Tshipi Alexander, Head of Issuing Sales and Service at Nedbank Corporate Card, tells SmartProcurement.

Creating a culture of spend optimisation

 

CultureOfSavings.jpgSpend management evolved from a technology perspective when it was realised that organisation-level purchasing required a separate and unique set of tools that could set it apart for improving efficiency and gaining deeper insight into spend.


While spend management has expanded into other areas of the supply chain, it is still focused on controlling spend related to operating costs and lacks an ability to promote procurement into a strategic role within organisations.


Consequently, an evolution of spend management is occurring - a new concept coined “spend optimisation”.

Buying Telecommunications? Avoid long-term agreements

 

Developments_telephony.jpgDramatic changes expected in the South African telephony market over the next few years mean buyers of telephony and IT services (fixed line and mobile) should avoid long-term agreements with their current service provider(s), keep on top of market offerings and understand the changing need of the businesses they serve, says Purchasing Index’s (PI) Alan Low in this month’s SmartProcurement.

Real-time BEE transformation analysis - turning data into action

 

TalentManagement.jpgBuilding an organisational scorecard showing B-BBEE achievements against the relevant codes is useful in itself. However, for most organisations this exercise is manual, takes a long time to complete and is retrospective.


What is required is a service that goes beyond a static scorecard to a fully integrated B-BBEE analysis service that tracks strategic BBBEE goals through their tactical requirements to delivery, turning data into action, Alan Low of Benchmarking organisation Purchasing Index (PI) tells SmartProcurement.

Pcard's main purpose is to save you money...

 

AnitaCarolus.jpgWhile procurement card programmes have many noteworthy benefits, as outlined in previous SmartProcurement articles, ultimately their role is to save you money, says Anita Carolus, Nedbank Corporate Card National Sales Manager.

Government could police spending cuts with a P-card system

 

Gordhan.jpgScepticism around government’s severe cuts to perks and expenditure, and whether these will really work, has been further fuelled by recent instances where members of public office have not adhered to the Finance Minister's spirit of cost-cutting. With the public’s patience wearing thin, government should consider a procurement card programme to curb expenditure, and reduce fraud and a waste of funds, writes Anita Carolus, Nedbank Corporate Card National Sales Manager, in this month’s SmartProcurement.

Driving visibility within African supply chains

 

SupplyChainVisibility.jpgAs supply chain management becomes increasingly central to business strategy, so the need for visibility within the supply chain becomes paramount. Greater end-to-end visibility improves revenue and reduces costs, while allowing for better management of disruption, complexity, opposition and growing customer expectation, Tech-Pro tells SmartProcurement.

4 major supply chain trends in 2014

 

Trends2014.jpgIn recent years, the on-going quest for efficiency and flexibility and the impact of emerging technologies, innovation and ever-changing customer demand, has seen the South African supply chain mature from a corporate function into an enabler of growth and a strategic weapon, providing value for customers’¹, Tech-Pro Personnel tells SmartProcurement.

Failing to compare prices and services guarantees squandered expenditure

 

AlanLow_2013.jpgBy not benchmarking the prices and services you receive from suppliers and the way you use those goods and services removes valuable insight into what other organisations are achieving in the market and increases unknown risks, says Alan Low of Purchasing Index (PI), in this month’s SmartProcurement.

P-cards can 'doctor' your headache payment areas

 

headache.jpgAfter implementing a P-card programme to replace petty cash, and if the programme is working well, clients often ask: “where do we go from here?”


Anita Carolus, Nedbank Corporate Card National Sales Manager, suggests that clients investigate all their payment processes and expand their P-card programmes into their 'headache' processes or problem areas. This could be anything from a process that has numerous steps to one that has a lengthy turnaround time.

Comedy of errors with supplier visibility

 

comedyerrors.jpgThere is something between Shakespeare and the Indian silver screen. For decades, Shakespeare’s works have inspired directors to churn out some of the most memorable hits on the big screen. The perennial favourite theme is based on one of his earliest plays, The Comedy of Errors. The play depicts the story of two sets of identical twins that are separated at birth and later reunite in their youth after being tangled in a series of confusions and twists based on mistaken identities.


Managing an average portfolio comprising thousands of suppliers, supply chain professionals must have witnessed the supplier duplication comedy of errors being played out in their day-to-day work far too often. The only difference in this case is that no one is laughing, says Keertan Rai, Solutions Marketing Manager at Ariba, a SAP Company, in this month’s SmartProcurement.

Can credit cards limit procurement fraud-risk? Surprising answers...

 

CardFraud.jpgClients share one major concern when they consider a procurement card programme: “Will we not expose the company to card fraud and abuse?”


Fraud and abuse are a reality in business and procurement card controls, such as expenditure limits and only from specific suppliers, can help prevent card fraud. However, a procurement card does not always prevent fraud or abuse from happening; rather its strength lies in shedding light on suspicious behaviour and expenditure, says Tshipi Alexander, Head of Issuing Sales and Service at Nedbank Corporate Card in this month’s SmartProcurement.


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