Tools

SAP functionality can relieve the pinch of your procurement group's rationalisation

 

StevenFreemantle2.JPGReducing costs is a common survival strategy for organisations to employ. But, as the economic situation deteriorates, what started as a doing away with coffee, printing paper or non-essential spares becomes organisational restructuring, which may translate into job cuts. Purchasing departments have not been spared the distress of this kind of cost management, yet are still required to maintain (strategically) the service levels needed to keep customers satisfied.

Having seen many forms of cost reduction over the years (as an advisor in SAP supply chain optimisation), Steven Freemantle notes that staff reductions are seen as an accepted, albeit hugely disruptive, strategy to weather the storms of uncertain economic times, and like many strategies, there is often a disconnect between strategic intent and the day-to-day tactical activities.

“Staff are often thrust into new or different supply chain roles where they quickly become overloaded, however, if you run SAP this kind of painful organisational change can be soothed in many ways – there are SAP tools to effectively do 2, 3 or 4 people’s jobs,” says Freemantle, from SweetThorn Thought Leadership, 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.

Your SAP user community might be lying to you, but only because you let them

 

StevenFreemantle2.JPGIt is not unusual to find the procurement departments inside SAP-driven companies at loggerheads with their internal customers. In extreme cases sales, production planning, maintenance and procurement staff are on the verge of conflict – the common enemy being procurement. The typical symptom is accusations of dismal service countered by allegations of poor or no planning and utterly unrealistic expectations. This blame shifting descends into turf defending, silo mentality and, ultimately, supply chain role players becoming less and less liberal with the truth, says Steven Freemantle, of SweetThorn Thought Leadership, in this month’s SmartProcurement.

Case study: e-procurement and procure-to-pay effectiveness at Mondi

 

eprocurement.jpgA recent study conducted across international divisions of Mondi Ltd found that the South African-listed pulp and paper giant does not fully utilise, compared with best practice, enterprise resource planning (ERP) solutions and electronic procurement (e-procurement). In fact, Mondi South African Division meets only 11 out of the 28 recommended best practice requirements (41%) in the procure-to-pay (P2P) process.


Based on the study, it was recommended that Mondi standardises the utilisation of ERP and e-procurement solutions as far as possible throughout all divisions at a global level, which encompasses its operations in 42 countries and 33 000 employees.

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.

Technology's role in improving the supply chain

 

Tech.jpgTechnology drives innovation and can mitigate risk in the supply chain. In recent years the integration and globalisation of supply chains has improved efficiency, but has driven complexity and vulnerability to the point of disruption. Advances in SCM technology offer a solution, Tech-Pro Personnel tells SmartProcurement.

 

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.

Reducing transaction costs - the end of the firm?

 

RonaldCoase.jpgThe man who introduced the concept of transaction costs recently passed away at the age of 102. Interestingly, his 70-year-old theory explains organisations’ vertical integration in the first half of the 20th century and their contradictory aggressive outsourcing more recently. But how is the lower transaction cost offered by the Internet revising the theory? asks Ariba’s James Marland, Vice President of Network Strategy, in this month's 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.

Millennials' tech expectations empower the other 6 billion (Part 2)

 

CustomerServiceGenerationY.jpgMillennials in the developed world are driving the adoption of technologies that facilitate commerce in the supply chains of the developing world.


As developed nations mobilise their workforce and embrace new models of business, such as The Networked Economy, developing nations are benefiting from the wave of simple, streamlined and mobile solutions, for which they can thank the expectations that Millennials have of technology, says Richard Downs, Director, Solutions Marketing – EMEA, Ariba, an SAP Company, in this month’s SmartProcurement.

The 'Millennials' workforce will change the supply chain (Part 1)

 

millennials_1.pngWhile on a search around the web, Richard Downs, Director, Solutions Marketing – EMEA, Ariba, an SAP Company, came across a statistic which made him ponder how traditional business challenges will change in the future: 75% of the workforce in 2025 will be ‘Millennials’.


In part one of two, Downs wonders how traditional procurement challenges will change as businesses start to recruit Millennials in vast numbers.

Current procurement methods do not support mini budget's austere measures

 

TraceyShaw.jpgMany of the key items subject to austere measures under Finance Minister Pravin Gordhan’s mini budget fall under the Travel and Expense (T&E) portfolio.


While these cost-cutting measures are a step in the right direction to curb excessive spending, Tracey Shaw, of travel technology company TraveluXion, wonders how they will be implemented in practice if procurement methodologies are still outdated and dependent upon fragmented processes across various suppliers, without any supporting technology?

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.

Beyond labour unrest at BMW: Using technology to increase SCM competitiveness

 

CompAdv.pngMany South African businesses believe that the availability of cheap labour is the most important factor when it comes to being competitive globally, which may partly explain why the business community reacted with such alarm to the news that BMW cancelled it plans to expand production owing to labour unrest.


“Whilst labour is a major concern for business in general, it is only one of many factors that affect cost. Consequently, South African businesses are largely missing out on the transformative role that implementing the appropriate technology can have on both reducing costs as well as identifying new streams of revenue,” says Bruce Laval of supply chain specialists, VSc Solutions.

 


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