Today’s guest post is from Paul Martyn, Vice President of Marketing of Bravo Solution. Paul can be reached at p <dot> martyn <at> bravosolution.com or 312 279 6793. Most organizations have a diverse spend portfolio that includes many simple, several …
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A recent article over on CFO, which states the obvious, says that big lesson from the downturn is to cut inventory, not people. The timing of this is so poor it’s shocking! Why couldn’t they have run this *before* organizations cut so many people that joblessness came close to reaching an all time high: 10.1 in October of 2009 compared to the all time high of 10.8 in November of 1982! (Source: The Misery Index) As noted in the article, there is a huge savings potential in inventory reduction, which ties up working capital, eats up storage …
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… so long as it is black. This is one piece of advice from the early 20th century that we should not have forgotten in the early 21st. Maybe if a few more companies remembered this, they would not be in such dire straits. Consider the case of PolyOne Corporation that we discussed in a recent post on coming back from the brink to cash in the bank and how the complexity of too many manufacturing locations producing too many product variants was running them deep into the red. Now consider the case of Apple — one …
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A recent article in the McKinsey Quarterly noted that it is often difficult to make cost cuts stick, especially when the economy is improving, and that only 10% of cost reduction programs show sustained results three years later. To try and improve the situation, they offered us five ways CFOs can make cost cuts stick, which, briefly, were: Assign accountability at the right level Make sure the people actually spending the money are accountable for how it is spent, and that their compensation is related …
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The SCMR is back, Quinn is still in charge, and it looks like he’s striving to maintain the quality that the SCMR was known for. I was quite impressed with one of the first articles on driving a turnaround in tumultouos times, which presented a case study on PolyOne and how it came back from the brink of bankruptcy. In March of 2009, it’s share price reached an abysmal low of $1.32. On May 27, it was $10.19. That’s an eightfold improvement in a little over a year and the reason analysts are now recommending it …
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In a recent post we explained how sustainability is the current megatrend, but we did not give you any tips on how to deal with this information. In this post we’ll overview some of the advice provided in a recent Harvard Business Review article on the sustainability imperative and address how the sustainability imperative may impact your supply chain. The first piece of advice given in the article is to learn from past megatrends. For example, in both the IT and quality business megatrends, the market leaders evolved through four principal stages of value creation: …
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It’s still a buyer’s market. Many suppliers are desperate for business, supply (capability) still exceeds demand in many markets, and even though prices are starting to rise in some markets with expectation of recovery, they haven’t risen much yet. According to many strategic sourcing professionals, it’s the perfect market for an (e-)Auction because suppliers will compete for your business. And while that may true, it does not guarantee that you’ll get the best result. An e-Auction carries a number of risks. The result can be higher prices than a traditional negotiation. For example, if …
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A good reminder of this is Jim Anderson’s recent piece on The Total Cost Approach for Dealing with Unmovable Prices over on The Accidental Negotiator. As Jim notes, the purchase price of an item is not really the true price that we’re going to end up paying for it. There are lots of additional costs, fees, and services that go along with it. Ultimately it’s the total cost of what we’re going to end up paying that really counts, not just the initial purchase price. So if the seller won’t move on unit price, focus the negotiations on another …
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As noted in a recent brief from ChainLink Research, PPV (Purchase Price Variance) is a bad metric for Procurement, especially if your buyers’ performance is being based on it. Not only does this kind of metric encourage behaviour that may lower PPV but create a higher total cost, but it can cost your organization a bundle, and this goes for commodities that usually have low volatility as well as those that have high volatility. Here’s why. Let’s say you were buying 10,000 barrels of crude oil in 2009 on a monthly basis. The OPEC basket …
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Sourcing Innovation’s recent Illumination on Strategic Spend Visibility noted that best-in-class companies that strategically source their marketing spend save an average of 14.7% on five marketing and spend categories compared with a mere 7.8% savings for all other enterprises (as per a recent Aberdeen Group study) and that, across the board, with good visibility, an average marketing organization can easily find 20% to 25% savings with Procurement’s help (as per a recent Ariba report). Why? Last year’s report from the Marketing Supply Chain Institute on why you need to Define Where to Streamline makes it clear. A …
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