With kids back in school, many parents like me are reflecting on what has become an annual ritual of buying necessary school supplies and of course an equivalent amount of not-so-necessary 'things' to decorate or accessorize school lockers, shelves, backpacks, clothing, etc. So while the leading retailers like Staples...Office Depot...Walmart...Target and other cash in on this period with attractive deals, our friendly neighborhood 'fiVeBELoW' comes in very handy for all those non essentials. Don't get me wrong, sometimes compulsive bargain hunters (once a buyer always – a buyer) like me can also find deals for the back-to-school essentials and a number of other things at 'fiVeBELoW.' I often wonder if there exists a similar pattern in enterprise spending...meaning, does a similar phenomenon (the anything and everything at places like fiVeBELoW – for cheap or let us call it really low dollar spend buys) exist in enterprise buying, especially when we are talking about indirect spend. Throughout my Procurement career, I have come across companies with annual indirect spend ranging between a couple of million dollars up to and in excess of 15-20 billion (though they are very few). Spend items/services...what in old days used to be called 'petty' cash kind of spending...exist everywhere (the $$ amount may vary from a few thousand to a double digit millions), essentially exhibiting with one or more of the features as below.
Rajiv Gupta, Head of Procurement Services, Americas, Infosys
Even if you have a resilient risk management strategy in place, situations can arise that are out of your control. On the bright side, supply chain risk management provides the opportunity to differentiate and gain a competitive advantage. Advantages may include quicker crisis response time, adherence to regulatory requirements and ethical compliance, ensured internal quality standards and avoidance of sales shortfalls and image damage. If Supply Chain Risk Management (SCRM) is an interesting topic for you, I invite you to read the following recipe that not only outlines the single ingredients needed for a comprehensive supply chain risk management process, but also highlights how you can integrate SCRM within your organization.
Ingredient 1: Selection of Relevant Supply Chains
First, define which supply chains to focus on and to include in SCRM. In principle, one of two approaches can be used: 1) monitor all supply chains or 2) monitor a very specific section of the supply chain. The following parameters can be used and taken into consideration for specifying which to select: impact on sales/image, region, customer specification, purchasing volume, regulatory requirements, etc.
Ingredient 2: Definition of Risk Inventory
Typically, the risk inventory is recorded in a risk scorecard. This scorecard includes all individual risks and indicators, which act as sensors for detecting risk changes: supplier risk (e.g., insolvency, CSR compliance), location risk (e.g., natural hazards, strikes) and country risk (e.g., political or macro-economic).
Ingredient 3: Supply Chain Visibility
Approximately 51% of all supply disruptions originate below the tier 1 supplier. It is therefore important to capture the 1st tier of the supply chain structure and the supply chain substructures including 1-n tier suppliers and supply paths.
After a period of immense volatility, the banking sector appears to be reaching some level of normalcy. The financial crisis of 2008 was the trigger for drastic changes in the way the industry manages spend. As revenue streams froze and the spending behaviors of banks become front-page news, procurement was invariably thrust into the spotlight as a means of preserving the reputation and profitability of these organizations. Procurement teams operating in the banking environment face a challenging landscape when it comes to controlling spend. A great deal of change is needed, both structurally and culturally before banks can truly take control of their spend. However, procurement technology, if used effectively, can be a vital catalyst for these required changes.
What are they buying? Banks are essentially service organizations. The vast majority of their spend passes the professional service category (roughly 40%) in the form of management consultants and other temporary workers. Information technology and facilities management make up the next largest spend categories accounting for roughly 20% of total spend each. Spend on services is traditionally more difficult to analyze, understand and control than spend on goods, and this presents a challenge for a service heavy industry like banking. However, by leveraging procurement technologies, leading banks are addressing these areas with great success.
Diptarup Chakraborti, Vice President, Global Marketing, Zycus
The global regulatory environment is heating up – and not just because it's summer. As government enforcement actions capture headlines, corporate leaders are rightfully concerned about whether their due-diligence strategy can hold up to the increased scrutiny. Richard Girgenti, KPMG LLP's National and Americas leader for Forensic Advisory Services, wrote in an article in Metropolitan Corporate Counsel recently, that the rapid and ongoing nature of regulatory changes, the array of agencies involved in bringing enforcement actions and the aggressiveness with which they are enforcing such actions are resulting in "record fines and penalties, class action lawsuits, lost earnings and reputation damage." Girgenti would know, having more than three decades of experience – not just in advising organizations but in conducting investigations and overseeing policies on the enforcement agency side of the coin. So, what does he see as some of the top of mind issues for corporate leaders who want to stay out of hot water with regulators?
Three Enforcement Areas that Demand Enhanced Due Diligence
Mark Dunn, Segment Leader, Entity Due Diligence and Monitoring, LexisNexis
Dawn Tiura, SIG CEO and President recently spoke on an expert panel at Coupa Inspire, and shared her thoughts with candor and authority. Coupa interviewed Dawn shortly after the event and published a blog sharing her responses which we are publishing with Coupa's permission. The original can also be found on the Coupa website.
Thanks to Coupa for the blog interview below: One of our favorite parts of Coupa Inspire are the expert panels. There's nothing we love more than getting smart people together to talk shop. If you missed Inspire, you can read excerpts of the analyst panel and the CIO panel on our blog. Today we're talking with Dawn Tiura as a follow up to the analyst panel. Dawn is CEO of Sourcing Industry Group (SIG) and has been observing the industry for 25 years from her vantage point as a CPA turned sourcing consultant. There's no one smarter on the topic of where sourcing is heading, so when she remarked during the panel that in her opinion, the term buyer should be eradicated, that piqued our curiosity. So, we got her on the phone to learn more.
Coupa: You had some provocative things to say during our panel discussion. One was that you wished the 'buyer' title would go away. We were hoping you could expand on that.
Dawn: I sure could! To me, buyer is such a demeaning title. The only time somebody is excited to say, "I'm a buyer" is if they're in the fashion industry, because that's cool and exciting and sexy.
Whether you're ready or not, we Gen Y-ers are spreading through the workforce like wildfire. And what's next? Gen Z is just around the corner from joining the party. Should companies have prepared for this change? YES. If changes were not made for the immersion of Gen Y-ers, take that as a learning opportunity, and implement "next" practices in preparation for the next round of Millennials, Gen Z. The Millennial generation has a much different take on the workforce and what the future looks like. This is neither a good nor a bad thing. It is exactly what it sounds like: different.
Let's talk stereotypes.
Millennials: pretentious know-it-alls who possess a dire need for instant gratification...whether they deserve it or not.
Baby Boomers: People typically old enough to be our parents who firmly believe in their systematic ways...Why? Because they said so!
Is there some validity to both stereotypes? Sure. But I think it's more prudent to say that baby boomers DO know what they’re doing...after all, they've been out there doing it for much longer than us rugrats. However, do we Millennials have a fresh take on new practices? Of course! So where do we go from here? We have two TOTALLY different generations TRYING to work together. My attempt at a compromise:
Ashley Walsh, Marketing, Social Media and University Outreach Coordinator, SIG
Oil and Gas firms had a rough ride in 2014; the oil price dropped to below $50 USD a barrel, salary freezes were implemented and thousands of staff members were laid off. As the purse strings of oil and gas producers tighten, the importance of controlling costs and managing spend become ever more apparent. In order to succeed in the changing oil and gas environment, firms need to first understand how to get more from the money they spend (enter procurement). Listed below are a number of the key areas that oil and gas firms are likely to focus on over the coming 12 months. Also outlined is the critical role that procurement functions can play in helping their organization to achieve success in these areas.
Diptarup Chakraborti, Vice President, Global Marketing, Zycus
Amazon. The name alone makes you think of something big. So it makes sense that they might have something grandiose on the horizon.
With that in mind, I want to start a conversation about whether Amazon might be the next Ariba or Coupa. I heard a rumor that 10 or so Ariba people have gone to Amazon with the intention of making it the next and biggest B2B network in the world. Think about it, we all know how to use Amazon, they have a network that is massive, they have distribution and delivery capabilities, so why couldn't they host additional suppliers and be the purchasing platform for businesses? Amazon has the money, they know how to fill demand, they are nimble, they are constantly innovating...what is to stop them?! They could fairly easily add a feature that limits our searching to approved items with our company's contracted pricing (that it knows to show when we log on with our company credentials) and then check us out with a credit card or even link directly to our accounts payable systems.
Amazon is wildly successful, has a surplus of cash and has set the standard for online purchasing and customer service...so why not go a step further and move from the B2C to the B2B world? I was in the San Francisco Bay Area recently to speak at Coupa Inspire. I love being in the Bay Area surrounded by brilliant people with amazing thoughts and aspirations. After living there for 30 years, I should not be surprised by the number of new companies, ideas and appetite for innovation, however I always am. While there, I spent an evening with my oldest son and his girlfriend, both typical millennials working in Silicon Valley. We started "what iffing" and (since my son has grown up with me as a mom talking supply chain and sourcing and spent time working for Coupa) we convinced ourselves that this is distinctly possible. So was it the wine...or are you drinking the Kool-Aid and see the possibilities here too??
Over the last 20 years, the role of chief procurement officer has evolved significantly, shifting from tactical to strategic and finally gaining the attention of the Board. I was just reading an article in the Wall Street Journal by Bruce Nolop about the "Five Ways the CFO Role Will Change" and thought the categories and language were great to address from the CPO perspective as well. So what will the CPO position look like in 2025? Here are five predictions from a different C-suite role:
Strategic Partner: CPOs will become explicitly involved in developing bottom line AND top line strategies. CFOs are generally dealing with financial data after results are posted. In contrast the CPO can impact a company's cost-making decisions mid-stride versus after the fact. As more of the business recognizes the perspective of the CPO, they will come to depend on that office for strategic realignment recommendations and will be more apt to partner with the CPO throughout the year. The importance of the office of the CPO will become more widely recognized by both the CEO and the CFO as the CFO comes to depend on the CPO for guidance.
Globalization: As companies expand globally, CPOs will also adopt a more global mindset and quite often will set up Centers of Excellence in order to source from the perspective of those countries. While the CFO works to establish a favorable tax framework, it will be critical for the CPO to be aware of the limitations such frameworks can put on receiving and distributing goods as well as the taxation laws on services. In addition cyber security will still be top of mind with the CPO as well as all types of risk that the company is exposed to with the maturation of big data and the "Internet of things."
SIG Summits are known for having amazing keynote speakers…and at our Summit in Denver last fall we had a speaker who took it to a whole new peak…so to speak. In fact, our keynote Alison Levine gave us a new appreciation for the word "Summit" as she shared her experiences in climbing Mt. Everest. At first glance, one wouldn't immediately think this tiny woman had the physical stamina or grit required for this incredible journey...which is exactly why making quick judgments isn't ever a great idea. Not only did she lead a team up that most arduous of climbs, but she did it twice. TWICE. Facing extremely dangerous and life-threatening conditions within 300 feet of the Summit, she made the painful decision to turn back her first time up...but both journeys provided lessons anyone can apply as a leader. She had so many great takeaways that I'm not sure I can adequately sum them up...but my attempt and interpretation are below:
On effective teams, everyone is a leader at some point. There may be only one person with a designated leader title, but allowing people to have a voice builds trust and loyalty. And if you do, your team is more likely to look out for the people on either side of them and make sure they are moving in the right direction as well. We once had a speaker whose mantra was that you don't have to have a title to be a leader...truer words were never spoken. Think about the word "leadership" as more of a mindset than a title and you empower everyone with the ability to own it. When you give people not just room...but permission to take something and run with it, you might be surprised by the result.
The "Dollar Store" Phenomenon - Does it Exist in Procurement?
With kids back in school, many parents like me are reflecting on what has become an annual ritual of buying necessary school supplies and of course an equivalent amount of not-so-necessary 'things' to decorate or accessorize school lockers, shelves, backpacks, clothing, etc. So while the leading retailers like Staples...Office Depot...Walmart...Target and other cash in on this period with attractive deals, our friendly neighborhood 'fiVeBELoW' comes in very handy for all those non essentials. Don't get me wrong, sometimes compulsive bargain hunters (once a buyer always – a buyer) like me can also find deals for the back-to-school essentials and a number of other things at 'fiVeBELoW.' I often wonder if there exists a similar pattern in enterprise spending...meaning, does a similar phenomenon (the anything and everything at places like fiVeBELoW – for cheap or let us call it really low dollar spend buys) exist in enterprise buying, especially when we are talking about indirect spend. Throughout my Procurement career, I have come across companies with annual indirect spend ranging between a couple of million dollars up to and in excess of 15-20 billion (though they are very few). Spend items/services...what in old days used to be called 'petty' cash kind of spending...exist everywhere (the $$ amount may vary from a few thousand to a double digit millions), essentially exhibiting with one or more of the features as below.