The SIG Peer2Peer (P2P) program allows members to access benchmarking insights and best practices on topics specific to their needs. Using the Peer2Peer resource, members can leverage the experience of other industry professionals by posing questions to the greater SIG community on issues they are facing within their organization. Members use the forum to locate resources, source providers, seek advice on hot topics and share their lessons learned.
Below are the latest Peer2Peer inquiries. You or someone on your team may know the answer to one of the questions below. If you do, please take a moment to help a SIG member from the buy-side. You may need their help one day, too! To submit your own Peer2Peer inquiry, get in touch and we’ll pose your question to the SIG Community.
This buy-side member is re-writing their procurement policy and revamping their process for the requested addition/approval of a new supplier. They are seeking best practices for procurement policies, specifically covering the following topics:
What spend does/does not require a PO?
What are the consequences for procurement policy violations? For example: Committing company funds without a PO or contract.
How are violations to the procurement policy enforced?
What is the process for requesting a new supplier add? Who reviews/approves/denies this request?
When she’s not challenging the status quo and meeting her budget targets at the bank, Debbie helps to make her community a better place as the leader of the Huntington Women's Network Business Resource Group and as a volunteer with various Columbus charity organizations. A big believer in the power of personal connections, Debbie talks about her role at the bank, the importance of utilizing technology and her tips for building professional relationships that can pay off down the line. Debbie is well-known in the SIG community as a member of the SIG Thought Leadership Council, the SIG University Advisory Board and she leads the Steering Committee of the Risk Management Association’s Third Party Management Round Table.
Your keynote presentation at the Columbus CPO Meet and Eat was about tail spend management--why is this such a hot topic?
Huntington’s sourcing team, like many other companies, is lean. Identifying ways to direct low-dollar, high-transaction volume spend to a consistent, repeatable process through catalogs, spot-buys amongst preferred providers or non-catalog PO’s helps focus the team on more strategic projects while maintaining cost discipline in the tail.
Contracting is one of the most important parts of the sourcing process – this is one of the final steps in the process before (or in parallel with) implementation and it documents all terms and conditions agreed to by both parties throughout the sourcing engagement. While it is one of the most important steps in a sourcing engagement, it can also be one of the most painful with numerous rounds of revisions and reviewing legalese that can extend out a project timeline substantially at times. As a Sourcing professional, I’ve reviewed my share of contracts ranging from one page agreements to lengthy contracts with multiple attachments and exhibits. Each contracting experience is different, some have gone smoothly and are wrapped up in a few days’ time, while others took months to come to agreement on the final language. I will highlight a few recent experiences with contracting and some of the lessons learned that can be applied to others in similar situations.
Don’t skip the contract just because of a low spend figure.
On a recent project, my team was brought in to negotiate with a local hardware store that was used regularly for as needed supplies at a local manufacturing plant. Upon further investigation, we learned that the client had already negotiated a discount structure with this supplier earlier in the year, but there was no formal documentation because the annual spend with the supplier was below the threshold when contracts are required.
A category management program can put your organization on a path to achieve better outcomes, experience greater savings and result in an increased focus on collaboration and innovation. But launching a category management program is not just as simple as flipping a switch.
Before we jump head first into creating our category management program, there are some important considerations to take into account. The Hackett Group (Hackett) and GEP recommend addressing the following four critical needs for an effective program, which are summarized below.
Kevin Nash is the Vice President Chief Procurement Officer at Health Care Services Corporation, a Blue Cross Blue Shield Company. As an experienced executive in procurement, sourcing and supply chain operations, Kevin manages over 100 people who oversee a wide range of functions from sourcing and contracting to regulatory requirements. Kevin shares his tips to keep a large team organized, his outlook on the growing role of procurement in organizations, and his advice for those looking to be better procurement professionals and team leaders.
Can you talk about your background and education--how did you get involved in procurement?
Like many procurement professionals, I stumbled upon procurement early in my career and found it to be an interesting and exciting area to work. After graduating with a degree in engineering, I started my career at GE supporting a manufacturing process. While in manufacturing, I began to focus on supply chain because we were experiencing frequent supply chain and inventory issues that were significantly impacting the ability to meet the production schedule. After finishing my MBA and leaving GE, I joined a consulting firm and continued to focus on supply chain with an emphasis on procurement. While in consulting, I transitioned from focusing on the supply chain for direct material to supply chain and procurement in service-orientated companies.
In 2018, cost reduction still tops the list of priorities for procurement. As nations engage in trade wars and protectionist policies and extreme weather continues to cause disruption in supply chains, procurement will need to adopt new strategies to meet business objectives and goals.
Procurement can efficiently manage spend and continue to achieve cost savings through the adoption of category management, which is the process of categorizing goods and services and then managing these categories as "business units" to achieve improved outcomes in the most effective and efficient way.
Category management was developed in the 1980s and takes a project management approach to sourcing to achieve improved outcomes, which is structured, measurable and drives continuous improvement. It is used in both the public and private sector, and while there is no standard categorization or grouping requirements, a general rule is to group goods and services that have similar characteristics. Organizations can use the United Nations Standard Products and Services Code to group categories or it can develop its own homegrown models.
Category Management is Not Strategic Sourcing
Category management is not to be confused with strategic sourcing, although category management evolved from the overall strategic sourcing approach. Some of the main differences between category management and strategic sourcing include the following:
Rosemarie Subasic is a Vice President with Hines, a privately owned, international real estate firm. She is a Procurement Executive with more than 30 years of experience in corporate and government facilities, real estate and operations management. For the past 12 years, she has been responsible for facilities operations for Morgan Stanley, with an annual operating budget of over $150 million dollars. She manages over 70 sourcing activities annually.
Rosemarie will be a featured presenter at the New York City CPO Meet and Eat event on September 12 from 8 a.m. to 11 a.m. This event is a three-hour breakfast meeting with CPO-only level delegates. The event topics are focused on current events locally, nationally and globally, and allow CPOs to seek input from the group on their own top-of-mind issues. By keeping this meeting very high level, CPOs are better able to share and network with each other.
Can you talk about your background and education--how did you get involved in facilities management?
I graduated as a marketing major with a business degree in 1985. My first job after college, as an Operations Analyst for the City of New York, involved collecting, reporting and using data related to real estate and facilities operations. From there I went on to manage real estate and support services for the Department of Transportation (NYCDOT) and decided to pursue facilities management as a career.
In my last blog, I spoke about ethical sourcing and the many benefits it can have for your company. Seems like a no-brainer, right? When attempting to put in a plan to obliterate unethical practices in your supply chain, it starts to be risky business. The best way to mitigate risk is to set up a solid plan and be diligent about following through with it.
In my research to find a clear plan to mitigate unethical practices, I found a slew of proposed methods. Unfortunately, I felt that many of them seemed too simple—basically, too easy and too good to be true. I finally came across a solid and thorough plan proposed by Declan Kearney, the founder of 360° Supplier View, who shares tips with companies to ensure ethical sourcing practices in their supply chain.
Do Your Research
Make sure you do your research on your suppliers…and their suppliers. With myriad complex regulations now put in place, go out and learn from case studies and the resources that will act as a survival guide as you attempt to research your vendors and suppliers.
Stay Away from the Fat Cat
Assess whether the higher-ups in your supplier organization are well known or politically aligned. These individuals are more susceptible to bribery or corruption.
Hailey Corr, Junior Editor and Marketing Associate, Outsource and SIG
Procurement has evolved to become more strategic and collaborative and has moved from an isolated, back-office function to a boardroom partner. While the procurement function must continue to drive hard savings, manage suppliers and mitigate risk, it must also pivot to look for opportunities to deliver future savings and innovation.
“Procurement is at an inflection point,” said Dr. Marcell Vollmer in a recent interview with SIG CEO Dawn Tiura. “Procurement needs to transform into a value-added function focusing on strategic tasks.” How can procurement teams do this?
For all the great advancements that technology brings, it requires people to manage the technology. Oxford Economics’ survey among procurement executives and practitioners found that the top three investment priorities include new talent recruitment, training/upskilling programs and procurement/supply-chain technology.
When was the last time a presentation inspired you? Seriously…think about it. Now envision the last speaker who truly motivated you and ask yourself, was it their slides? (Dramatic pause.) I’m willing to bet that what got your attention had virtually nothing to do with the content presented…and everything to do with how it was delivered.
When presenting to an executive audience, this is even more critical. You have only a few minutes to convince your audience that the most valuable way they can spend their time right now is by tuning in to what you are saying. So, as you prepare for that next opportunity to speak in front of executives, keep these things in mind.
Set their expectations – They call it an executive “briefing” for a reason and the execs in attendance will be chomping at the bit to ask questions. Let them know at the outset that you will provide plenty of time for discussion.