SIG Speaks Blog

Business Outcomes for Procuring Value Beyond Cost Savings

"Price is what you pay. Value is what you get." - Warren Buffett So you think you've seen it all in sourcing and procurement? Have you tried to weed out real value beyond cost savings? Just because you are saving money doesn't mean you've driven value for your organization. It might seem to be amorphous and unaccountable, but the "value" of a deal or contract is definable by the stakeholders in your organization. Find out what they want, and you find what drives "value" in your company. When you know what someone wants, you can negotiate based on that. Maybe "value" is measured in time. Maybe it's measured in contract commitments. Maybe your supplier needs goods or services you have, that can be applied in barter or through profit sharing. Procurement has matured into more than just negotiating the best contract for the best price. The creativity and innovation that can spur both value and savings comes from doing deals that exceed the simple exchange of dollars for services. Here are a few things to consider when putting together a deal: Deal summary – create an overview of the deal:

  • Where did it start, how did it evolve?
  • Who is the customer (if there even is one)?
  • What is the desired outcome?

Intangibles to consider:

Celia De Benedetti

Predictive Analytics Replace Reactive

Leading procurement organizations will increasingly be able to anticipate future spending patterns rather than just analyze historical spending, and will be able to prevent supply risk failures, such as supply chain disruptions, before they occur.

When it comes to analyzing historical spend data, there already exists a major divide between world class and non-world class. Looking at a "significant amount" of spend visibility company-wide, the gap is getting bigger: 23% more world class had this level of spend visibility overall in 2012, and the gap more than doubled in 2013 to 47%, when 89% of world-class organizations achieved this mark overall. Top performing organizations also have better visibility as to how their suppliers are currently performing. In 2013, 80% of world class performers were utilizing a formal, supplier scoring methodology as compared to just 50% of the total peer group, according to Hackett Group benchmarks. Going forward, these leading organizations will seek to further extend their advantage by leveraging spend and supplier analytics in more proactive and predictive ways, for example:

Richard Waugh, Vice President, Corporate Development, Zycus Inc.

14 Ways the Workplace is Evolving - Is Your Corporate Culture Keeping Up?

As corporate cultural battles play out, workplaces have become the battleground, with outcomes increasingly dependent on worker engagement, health, well-being and a sense of belonging or purpose. The following are 14 workplace trends reshaping corporate cultures in 2014 and beyond:

Bernice Boucher

What Inspires You?

Editor's Note: We saw a longer version of this blog a few months ago and were inspired by the support that Beeline provides to the global community. We asked if we could share it with the SIG community to inspire other companies to do more and/or to share what they do. Please read below...be inspired...and share your own wonderful work with us!

What Inspires You? I have been thinking about this question for several months now, no doubt due to the "Be Inspired" theme from the 2013 Beeline Conference. After hearing from such amazing speakers like Derreck Kayonga (the Global Soap Project) and Robert X. Fogarty (the Dear World project), I felt overwhelmingly inspired. See photo where SIG's own Dawn Evans participated in the Deear World project.


 

Their projects have affected countless lives around the world, which really got me thinking about Beeline's philanthropy. Every day at Beeline, my colleagues make a choice to place an importance on giving back to the community. One thing is certain: I am inspired by the generosity of others.

Typhoon Relief After thousands lost their lives (and countless remain homeless) from the typhoon that struck the Philippines in November 2013, Beeline immediately set up a fund to support relocation and rebuilding efforts. The Beeline office located in Manila spent a Saturday packing supplies for the victims of this typhoon and made the decision to cut certain budgeted items. Feeling inspired to help, several Filipino colleagues in the Beeline Jacksonville office immediately set up a Typhoon Donation Luncheon and made traditional Filipino food. Between both offices' efforts, Beeline raised $9,564.47 to support this effort.

Marci LaValley,

Engaging with ICs? Three Things to Consider

Engaging with independent contractors (ICs) is a very productive and cost effective way to work smart in your business. As more companies implement contingent worker programs as part of their overall business strategy, it's important to make sure that you as a company are protected from issues beyond the proper individual IC classification of your contractor talent. Many articles have been written about IC compliance, and the aim of these less obvious recommendations will help ensure your contractor talent program is successful and fully compliant. 1. Make sure your company understands the importance around proper IC classification and the Affordable Care Act (ACA). As a company, it's essential to have a clear IC compliance process in place to provide protection from possible issues regarding health coverage and other benefits responsibilities.

Mark Young, Senior Vice President, Human Capital Practice, Synergy Services

In the blink of an eye...

Each spring or fall as we approach the Summit, my creativity stops flowing and I go into "do" mode. My approach to everything becomes VERY tactical. My shoulders tense early in the day as I make a handwritten list with the various tasks I need to accomplish. If the item isn't: (a) going to print; (b) necessary for the Summit; or (c) required to keep one of my children alive, it probably won’t be addressed for a few more weeks. That's just the nature of working for a company that puts on large-scale events. We look at every detail from every angle and do everything in our power to execute as flawlessly as possible. That isn't to say that everything goes perfectly. It doesn't...but it's our job to shake it off, find a new solution and move forward like swans—looking peaceful and content above water, but paddling like all heck underneath. We arrive at the Summit location a full 4-5 days before our first guests arrive. In a sea of commotion, we unpack boxes, set up rooms, organize our registration desk, write last minute announcements, put together signs, meet with the hotel and check off the myriad things on our individual and collective "to do" lists (and yes, there really is a group "to do" list). It is a blur...and yet those days before the Summit starts are relaxing in an odd sort of way. We get the chance to reconnect with our colleagues whom we see only a few times a year. We are able to appreciate in person the amazing work our team members produce. And we laugh. A lot. As Saturday becomes Sunday becomes Monday, the anticipation of delegates arriving escalates palpably. The quiet buzz of excitement in the air becomes a cacophony of sound, not the least of which are the intermingled voices of delegates greeting old friends and making new connections. Although I look forward to our keynote speakers and hearing the latest trends and discoveries in the incredible breakouts, I secretly think that it's the sound of people connecting that I love the most.

Sarah Holliman

Is your real estate sourcing approach strategic?

A strategic sourcing approach can accelerate enterprise growth. Deeply knowledgeable on IT issues, procurement leaders offer a sophisticated understanding of how to make IT purchases impactful to the corporate bottom and top lines. The next hill to climb in delivering increasing value to the C-suite may lie in another significant expense category: corporate real estate. Companies outsource facilities management and related services to reduce expenses, and those expectations are met, but they soon learn that real estate strategies can provide even greater value in areas such as employee engagement, worker productivity and risk management. The right real estate partner with the right strategy in place can also help companies optimize balance-sheet and P&L impact, enhance employee attraction and retention, and meet strategic goals in areas ranging from M&A to sustainability. These goals are often the responsibility of internal departments other than real estate, so gaining the benefit requires strong collaboration among internal teams. If this collaborative spirit doesn't already exist at your company, bringing in a third-party real estate partner can help bridge communication gaps and align the goals of different departments to gain mutually beneficial results. Some areas where collaborative initiatives pay the biggest dividends include:

Bryan Jacobs, Executive Managing Director, JLL

Confessions of a Twitter Addict

There. I said it...I am officially addicted to Twitter. How can that be, when just a year ago I didn't even know how to log in? At that time I thought it was only for celebrities who used it to "tweet" about their exciting lives. How could anything meaningful come out of 140 characters? I thought it really wasn't going to catch on in business. Well, I decided I was acting like a fuddy duddy (yes, that tells my age) and would give it a month. Much to my surprise, after the month flew by, I knew I was addicted. Now I am going to tell you why you should consider having a twitter account. I don't care if you tweet (send out messages), but if you want to learn, you do need to follow (receive tweets) others. I started following some really interesting, talented, well read, educated people and by reading their tweets and their bit.ly (shortened) links to articles and other things they post, I am blown away by how much I have learned! How? Well, I follow people in sourcing, outsourcing, logistics, supply chain, economics, news feeds, research, member companies, technology etc. From each of the 500+ people I follow, I glance at their tweets on a daily basis and when it catches my eye I click on the article/whitepaper/video that they linked to and start reading and learning. I can only skim a handful of sites and periodicals myself...what my twitter network has done is opened the world of knowledge to me by having 500+ sets of eyes covering the news we should be hearing and bringing it directly to me. If each of my 500+ follow another 500+ interesting twitter links I have exponentially exposed myself to people all around the world interested in the same topics I am. I am seriously astounded by all that I am able to read/learn/consume about topics that may have taken months or years to bubble to the top of my knowledge base. I am now able to see cutting edge ideas as they emerge and can plan on how they apply to SIG, sourcing and outsourcing.

Dawn Tiura Evans

Procurement Must Think "Small" to Unlock "Big Data" Opportunities

Spend Visibility at the most granular level identifies what is being purchased and from whom it is being purchased. Taking spend analytics a step further - to see who is buying, how they are buying and why, and also comparing what an organization is spending as compared to the industry overall, will help leading organizations uncover previously untapped savings opportunities by looking at spending behaviors and identifying new and better ways to proactively influence demand. Today procurement organizations are swimming in data, in fact Capgemini Consulting forecasts that over the next 5 years, the growth of data – both structured and unstructured – is expected to grow at over 650%. So the procurement data is plenty "Big" – the problem is having real analytical visibility to do something with it. As Capgemini points out, most analytics provide aggregate visibility which is not actionable: "Aggregates in isolation provide very little actionable information. Analytics, on the other hand, can tell you what's happening in the business and how well you are servicing it." So to make sense of "Big" Data, first think "Small" by being able to interpret purchasing patterns through transactional level insights, something world-class procurement organizations are much more likely to be able to do than their counterparts. According to Hackett Group benchmarks, 23% more world class procurement organizations had a "significant amount" of spend visibility company-wide than the peer group in 2012, and the gap is getting bigger, more than doubling in 2013 to 47%, when 89% of world-class organizations achieved this mark overall. Procurement organizations will be putting their money where the mouth is by upgrading their investment in analytics during 2014.

Richard Waugh, Vice President, Corporate Development, Zycus Inc.

Suppliers Managing Suppliers

Over the past two years I have had the opportunity to spend time within several Fortune 500 procurement departments undergoing large-scale organizational transformations. While the goals and approach varied by firm and industry, there was one definitive similarity...each company sought to realign the focus of their full time employees on the most strategic activities. This shared objective manifested itself in various ways, including:

Joel Johnson, Manager, GEP

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