Strategic Sourcing

8 ways to create procurement value

SergeyDovgalenko.jpgProcurement professionals who traditionally measure their effectiveness by means of savings will sooner or later face the following problems: a depletion of supplier resources and a loss in supplier motivation in terms of further co-operation. Suppliers cannot always be the sole source of benefits, patching holes in your company's balance sheet with their funding, says Sergey Dovgalenko (FCIPS), Head of Procurement, Etihad Airways.

Forget everything you know about strategic sourcing

KellyBarner.jpgAn early look at Ardent Partners' CPO Rising 2018: The Age of Intelligence report revealed that, for the first time this year, sourcing has fallen out of the top 10 strategies employed by leading Chief Procurement Officers (CPOs).

Kelly Barner, Managing Director of Buyers Meeting Point, an online resource for procurement and purchasing professionals, discusses how we can rediscover strategic sourcing's potential for value-driven spend management.

CPOs - becoming Board-relevant and building stronger relationships with senior execs

BillCrothers.jpgEven though the Procurement function is becoming critical to business success, it all too often remains seen as driving cost savings rather than being worthy of a seat at the Board table in determining and helping to drive broad corporate value.

However, working on the Board of Greensill Capital, a global supply chain finance specialist company, Bill Crothers, a former UK Government Chief Commercial/Procurement Officer, has seen how Chief Procurement Officers (CPOs) can make a dramatically positive contribution to the balance sheet, work with their Treasury, Finance, and IT colleagues, and be much more Board relevant.

In this month's SmartProcurement, Crothers writes about how CPOs can build stronger relationships with senior executives and make a dramatic impact on their businesses.

How can procurement drive down the cost of processing transactions?

 

IanHendry2.jpgWhat is the cost to your business to process one purchase order (PO)? How many POs do you process with a value below that amount? Are you spending a lot of money processing invoices of a low value?

If you need to simplify your procurement of low-value items, then you are in the company of most South African organisations. The average cost of processing a PO in South Africa is more than R700.

Implementing a P-Card programme is one solution. The average cost of processing procurement card (P-Card) transactions is typically less than R200, says Ian Hendry of Nedbank Commercial Card.

Changing behaviours in sourcing - Q&A with Salesforce and Oracle's former CPO

 

GregTennyson.jpgCPO of VSP Global Greg Tennyson leads transformative change. He is the former VP and CPO (source-to-settle and expense-to-settle) at Salesforce and Oracle.

Greg sat down with ScoutRFP to discuss sourcing’s ever-evolving relationship with business - he talks culture, Moolah (the spend-it-like-its-yours monster) and how CPOs can work with the pace of change at an organisation to reach sourcing-stakeholder “utopia.”

When does labour become a commodity to be procured?

 

Commoditised_Labour.jpg

Mluleki Ntlemeza, a supply chain consultant wonders if there is point at which labour should be procured by procurement, and not through traditional HR processes, in this month’s SmartProcurement.

Negotiating with consultants - the insider perspective

 

BillMichels.jpgIn the indirect category one of the tricky negotiations is consultants. In many cases, they are brought in at high levels of the organization for their specific expertise. Often they have already been awarded the contract and are ready to start the assignment with the contract being the clean-up details. Has this ever happened to you? Bill Michels, CEO and founder of Aripart Consulting, gives some hints to improve negotiations with consultants.

7 key differences: strategic sourcing vs traditional purchasing

 

DrMuddassin.jpgProcuring materials with the intention of production, sales and service fulfilment is indispensable for every single business. However, the approaches, strategies and implementations to this differ immensely. Muddassir Ahmed, Divisional Supply Chain Manager at Eaton, discusses the difference between Strategic Sourcing vs. Purchasing.

8 ways procurement can radically reduce costs

 

GibsonSibanda.pngProcurement-managed expenditure accounts for an average of 65-75% of many organisations’ outflows. Tough economic situations, therefore, require procurement professionals to continually implement and manage cost reduction programmes.

As many organisations continue to search for ways to reduce costs, there should be an agreed and well-defined programme for and by supply chain professionals to cut costs. Gibson Sibanda (MCIPS), general secretary of CIPS Zimbabwe branch, outlines eight initiatives and contributions that procurement practitioners can adopt to reduce and contain costs, in this month’s SmartProcurement.

The low-hanging fruit has been picked. Now what?

 

JonathanHughes.jpgKraljic helped us pick the low hanging fruit, but the model is unlikely to drive the next wave of value, says Jonathan Hughes, Strategic Sourcing & Supply Chain Management Practice Leader at Vantage Partners, in this month's SmartProcurement.

Strategic sourcing rests largely upon a set of concepts and principles laid out by Peter Kraljic in his classic Harvard Business Review article "Purchasing must become supply management”, which was published in September 1983.

Market consolidation "key trend in procurement outsourcing"

 

MarketConsolidation.pngMarket consolidation and the inclusion of extra services will be among the most significant trends driving the global procurement outsourcing market, according to research.


Market research company Technavio analysed emerging trends to find the biggest factors that will influence the sector up to 2019.

5 rules for procurement to follow in business relationships

 

KateVitasek_540x800.JPGModern procurement is about reaching out, collaborating and working together to allow innovation. Both the goverment and the business sectors, even suppliers, can achieve better results if they work together to drive and improve procurement process in their organisations.


Speaking at the 3rd Smart Procurement World Conference Western Cape, Tennesse University Professor in Supply Chain Management, Kate Vitasek addressed delegates. Her presentation emphasised stabilising economies and driving business growth strategies in South Africa.

Cost cutting returns to No.1 priority for CPOs

 

CostCutting.pngLast years’ top priority, elevating the role of procurement to a trusted advisor, pushed to second place, reports Supply Management.


Procurement departments are facing a challenge to balance cost reduction with the desire to become better strategic partners because operating budgets and staffing will increase only slightly this year, according to research.


The Hackett Group said its study, The CPO Agenda, found that increased business uncertainty and risk are driving a resurgence in cost reduction strategies.


According to the study, which surveyed procurement executives from nearly 180 large companies in the US and globally, reducing and avoiding acquisition costs was the highest ranking priority in 2016, cited by 85% of respondents.

Using local government's R340bn spend to develop suppliers to increase service

 

Mr Xolile George.jpgWhen local government is judged, the public evaluates the functioning of sanitation, water, collection of waste, traffic lights, solid waste and cleanliness, as those are the fundamental issues a local government ought to do.


However, behind the scenes, an area receiving a great deal of municipal attention is the need to develop the capability and capacity of suppliers, which is inextricably linked to a reliable and continual supply of municipal services.


SmartProcurement spoke to Xolile George, CEO of the South African Local Government Association (SALGA) to find out how the municipal sector can leverage its R340-billion annual spend to drive efficiencies and better empower SMEs.

Value analysis and value engineering: the essentials of collaboration to improve the value equation

 

GrantWall.jpgHandled poorly, rationalising the design of goods or services to extract greater value or lower costs has the potential to sour internal and external relationships.

To prevent relationships from deteriorating ensure that you include everyone who can make a meaningful contribution to a value analysis (VA) and value engineering (VE) project, Grant Wall of Grayle Consulting told SmartProcurement.

On-demand strategic sourcing and category management services

 

Chain.jpgAs sourcing becomes increasingly responsible for supplier relationship and contract management, personnel are often stretched too thin across multiple categories and suppliers to effectively manage expenditure. Furthermore, headcount within procurement groups typically grows at a rate insufficient to meet those increasing demands.


Utilising the internal procurement organisation in collaboration with third-party support can lead to more innovative solutions, new technologies, optimised supply chain strategies and improved category management.


 

 

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