Discuss, debate and exchange ideas on latest trends and opportunities in the Business Process Outsourcing (BPO) landscape. Deliberate on adding “business value” to clients, vendors, employees and various other stakeholders to enhance customer satisfaction and sustain long term partnerships.

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November 3, 2016

Mobile Travel Policy. Do you have one?

 
Very few companies claim to have a comprehensive mobile travel policy. Majority of professionals use their mobile devices both in and outside the office to stay productive. Hence it is time to act, in order to catch up with the lightning speed of developments in the mobile space.

Continue reading "Mobile Travel Policy. Do you have one?" »

October 25, 2016

How will the 'Cloud' survive without the 'Safe Harbor'?

 
The European Court of Justice delivered a judgement in a particular case in 2015, which sent a very strong message that safe harbor alone was inadequate to ensure the protection of personal data.

Continue reading "How will the 'Cloud' survive without the 'Safe Harbor'?" »

October 12, 2016

Top down vs Bottom up. Four simple things to consider.


In this blog I have listed four elements that decide which implementation approach would be more effective when an organization is looking for procurement --or any other business function -- outsourcing.

Continue reading "Top down vs Bottom up. Four simple things to consider." »

October 6, 2016

You've got the best sourcing professionals - but do you get the results?


 
"Our Group CPO and all other CPOs in the company all make great contracted savings and the incentive structure in our sourcing function reflects this." claimed the Head of Strategic Development for Sourcing & Procurement in a global company...

Continue reading "You've got the best sourcing professionals - but do you get the results?" »

September 28, 2016

Bus number 221 to procurement 'Nirvana'



There are instances where your 'plan' gets hijacked by something urgent and you're not able to focus on the planning or strategy part of your job. A lot of times there is no time to even sit down and think in solitude about the problem/ situation or a strategy....

Continue reading "Bus number 221 to procurement 'Nirvana'" »

September 13, 2016

The "Procurement's Trilemma" and how to tackle it


Does the word "Trilemma" even exist for anyone to even begin comprehending the title of this post? The answer is yes. Webster's dictionary succinctly describes it as a state of things in which it is difficult to determine which one of three courses to pursue.

Continue reading "The "Procurement's Trilemma" and how to tackle it " »

August 31, 2016

In Chains in Supply Chain


The US Democratic Party presidential candidate Hilary Clinton is strongly advocating against modern slavery in her current election campaign. In the UK, the new Prime Minister Theresa May is setting up a government task force to 'get a real grip' of this problem.

Continue reading "In Chains in Supply Chain" »

August 2, 2016

Corporate Boards - Wake Up To Streamline Chaotic Supply Bases

One CPO indicated the root cause of chaotic supply base is -"First, we let anyone and everyone become our supplier and then we keep complaining that we are losing our sleeps working with so many of them".

Continue reading "Corporate Boards - Wake Up To Streamline Chaotic Supply Bases " »

July 28, 2016

Torque to horsepower: A practitioner's perspective on cataloguing

Jay Leno once said "Horsepower sells cars, but Torque wins races!" Being an auto enthusiast myself, I was pondering over this statement in the context of procurement..

Continue reading "Torque to horsepower: A practitioner's perspective on cataloguing " »

July 20, 2016

How sacrosanct is the 'evaluation criteria' in a sourcing project?

If you have been a buyer, have you come across a situation where the score card clearly recommended a particular vendor, but the management decided to select another vendor....

Continue reading "How sacrosanct is the 'evaluation criteria' in a sourcing project?" »

July 12, 2016

Divided they fall - master data, category strategies and e-procurement tools

Most of the purchasing functions fail miserably in tightly uniting three important resources together.

Continue reading "Divided they fall - master data, category strategies and e-procurement tools" »

July 1, 2016

Should you reshape your procurement career in the middle of AI and automation?

What's the silver lining your procurement career has in such turbulent times? You can still save your career by following at least one of two approaches.

Continue reading "Should you reshape your procurement career in the middle of AI and automation?" »

March 1, 2016

A practitioner's approach to Spend and Process management

Procurement services provided to scientists, researchers and clinical administrators, require a committed understanding of the sector along with domain competence which makes all the difference in the world of BPM services.

Continue reading "A practitioner's approach to Spend and Process management" »

October 26, 2015

Have you used an e-Market Place as a Sourcing Strategy?

Can e-marketplaces be used as an effective sourcing strategy? Here are my observations.

Continue reading "Have you used an e-Market Place as a Sourcing Strategy?" »

October 15, 2015

Baselining purchase savings - Is there a best way? Part 2

How to baseline / calculate purchasing savings? You would expect this to be a subject of the past; discussed, debated, standardized and adapted. Unfortunately No. Only one thing is standard - there are no standards. Read on for Part 2 of the series.

Continue reading "Baselining purchase savings - Is there a best way? Part 2" »

September 14, 2015

Baselining purchase savings - Is there a best way? Part 1

How to baseline / calculate purchasing savings? You would expect this to be a subject of the past; discussed, debated, standardized and adapted. Unfortunately No. Only one thing is standard - there are no standards.

Continue reading "Baselining purchase savings - Is there a best way? Part 1" »

September 9, 2015

Beware - Your purchasing might be incongruent and not novel

Often the actual state of procurement functions is dismal and under the radar of usual KPIs and CPIs which don't have adequate entropy to make meaningful business assessment.

Continue reading "Beware - Your purchasing might be incongruent and not novel" »

September 7, 2015

"Commonsense" Procurement

Somehow, in the flurry of fast evolving technological changes and other environmental distractions, the four fundamentals of procurement (which I call "commonsense procurement") have been relegated to the background.

Continue reading ""Commonsense" Procurement " »

August 28, 2015

What purchasing professionals can learn from good business journalists

What? "Supply management professionals need to be like good business journalists". Who says?

Continue reading "What purchasing professionals can learn from good business journalists" »

July 31, 2015

Lost savings are like lost baggage

Getting back lost savings is getting more predictable and market leaders are investing in the same, perhaps airlines also should invest in making lost baggage more traceable.

Continue reading "Lost savings are like lost baggage" »

June 17, 2015

Supplier Relationship review needs a long term vision?

Effective supplier relationship helps in continuous performance improvement through seamless delivery of products and services.

Continue reading "Supplier Relationship review needs a long term vision?" »

October 15, 2014

Avoiding Cognitive Dissonance in Buying Decisions

"Cognitive Dissonance" is a well-established theory and concept which is defined as a psychological conflict that occurs when beliefs and assumptions are contradicted by new information.

Continue reading "Avoiding Cognitive Dissonance in Buying Decisions" »

August 14, 2014

Disadvantages of Open Source Software

There is a very good reason for almost all businesses to change at least a portion of their software to Open Source.

Continue reading "Disadvantages of Open Source Software" »

August 1, 2014

Advantages of Open Source Software

There are pressures and complexities that are faced by businesses due to the use of closed source software and the answer may lie in the use of Open Source Software (OSS).

Continue reading "Advantages of Open Source Software" »

July 17, 2014

Current pressures on companies which require software to run their business

One of the answers to reduce the complexities of managing software assets would be to use Open Source Software.

Continue reading "Current pressures on companies which require software to run their business" »

July 8, 2014

Low Cost Country Sourcing (LCCS) - Are International Purchasing Offices the next paradigm?

I strongly believe LCCS could be the next paradigm - a more strategic kind of service when compared with a pure play BPO or BPM led service. 

Continue reading "Low Cost Country Sourcing (LCCS) - Are International Purchasing Offices the next paradigm?" »

June 24, 2014

Demystifying Master Data Management

Critical master data management capabilities and processes are required to produce data and information of high quality and consistency to make all enterprise applications work together.

Continue reading "Demystifying Master Data Management" »

June 3, 2014

Pre or Post Spend Classification??

Many organizations do their spend classification periodically after the spend has been concluded. However, an analysis of the Pre Vs. Post classification for the RoI will show if the game is on or not...

Continue reading "Pre or Post Spend Classification??" »

April 25, 2014

Kano and the Art of Customer Delight

Kano's model talks about three customer needs - basic, performance and delighters...it is easy to convert an angry customer to a delighted one.

Continue reading "Kano and the Art of Customer Delight" »

April 1, 2014

If you Don't Dig, the Silver Remains in the Mine

Tail spend is like a genie in the lamp, you would need to rub it in order to benefit from it.

Continue reading "If you Don't Dig, the Silver Remains in the Mine" »

March 28, 2014

Embedding Procurement as Fabric of the Business

There is an increasing need for the procurement organizations to be part of the fabric of the business and understand & deliver what the internal customers need.

Continue reading "Embedding Procurement as Fabric of the Business" »

January 30, 2014

Outsourcing Sourcing - How does it impact you as a Category manager

At an organization level, outsourcing benefits span across cost arbitrage, automation, compliance improvements, savings commitments, but how does it benefit you as a category manager?

Continue reading "Outsourcing Sourcing - How does it impact you as a Category manager" »

January 13, 2014

Secrets of building an agile and future-proof procurement function

There is a new breed of organisations that are building a procurement function which is ever ready for change and transformation is a part of everyday life. Observing some of these organisations, it emerges that there is a design and plan which is enabling them to build such a culture.

Continue reading "Secrets of building an agile and future-proof procurement function" »

January 8, 2014

Crystal gazing into procurement 2014

While there have been and there would be predictions at a strategic level, let us look at some of the more operational aspects of procurement and what are likely to be the trends for 2014.

Continue reading "Crystal gazing into procurement 2014 " »

January 3, 2014

Sourcing at Cloud Number 9

Many companies are getting on the bandwagon of cloud. But switching to cloud is a big change and with all the euphoria and excitement around it, sourcing and procurement function has to play an important balancing act to realize its true value.

Continue reading "Sourcing at Cloud Number 9" »

December 19, 2013

Are we buying a Product or a Service ? (Part-II)

Having looked at the product as a product and product as a service, in this concluding part of our blog, we will try to gain more insights on service and compare it with a product.

Continue reading "Are we buying a Product or a Service ? (Part-II)" »

October 18, 2013

7 Smart Lessons for Sourcing & Procurement Professionals

7 smart lessons I've learned from my mentors through the years. Particularly relevant in my work area - Sourcing and Procurement.

Continue reading "7 Smart Lessons for Sourcing & Procurement Professionals" »

October 15, 2013

"Innovative disruptions in Sourcing and Procurement" or so it seems!

There are examples from the world of sourcing and procurement that I can share from my experiences and a few of them come close to being disruptive, within the given scenarios, if not downright disruptive.

Continue reading ""Innovative disruptions in Sourcing and Procurement" or so it seems!" »

September 26, 2013

Are we buying a product or a service ? (Part-I)

How do we define product and service? How do we distinguish product and service other than being a line item in a PO or in a Procurement contract?

Continue reading "Are we buying a product or a service ? (Part-I)" »

September 23, 2013

Procuring Property and Facility Services

The more effectively a company manages its properties and facilities the more success it will have with its customers, employees and shareholders.

Continue reading "Procuring Property and Facility Services" »

September 17, 2013

Greater than the sum of the parts

BPO has tremendous potential to add significant value across the organization.  The key is making the proper assessments, analysing the right data, finding the right application and partnering with the right provider. 

Continue reading "Greater than the sum of the parts" »

June 26, 2013

Is Purchasing getting enough importance across organizations ? A practitioner's critical view point

Who doesn't know that the Purchasing function has indeed grown in its' importance during last 2 to 3 decades in particular. However, has this generated "enough" importance for Purchasing functions or not?

Continue reading "Is Purchasing getting enough importance across organizations ? A practitioner's critical view point" »

June 21, 2013

Social Media in Corporate Travel Management - Travel Manager's perspective

Penetration of social media into various aspects of life is nothing new. And the area of business travel management obviously cannot ignore this trend and social media need to be approached strategically by travel managers and travel procurement professionals.

Continue reading "Social Media in Corporate Travel Management - Travel Manager's perspective" »

May 31, 2013

Achieving Strategic Fit - Competitive Strategies & Supply Chain Strategies - Part - 1

From purchase of raw material to delivery of final product to the customer, a supply chain has different stages and the demand uncertainty is different for each stages. It is very important to understand the demand at each stage of supply chain and choose the appropriate level of responsiveness or efficiency for that level.

Continue reading "Achieving Strategic Fit - Competitive Strategies & Supply Chain Strategies - Part - 1" »

May 15, 2013

Not able to realize the value of validated contracts data?

Having a validated contracts data is the first step for any large procurement organization to get the full visibility of the spend under management and understanding supply base.

Continue reading "Not able to realize the value of validated contracts data?" »

May 13, 2013

Changing trends in today's procurement

Procurement now actively contributes in board room discussions and is drawing increased attention from senior management. It is being treated as a true business partner and becoming more centralized and coordinated.

Continue reading "Changing trends in today's procurement" »

April 25, 2013

Sourcing: Don't make it a zero sum game

Zero Sum Game as one of the key components of Game Theory (study of strategic decision making) can be defined as "A situation in which one participant's gains result only from another participant's equivalent losses".
Some might argue that in commoditized categories i.e. non-differentiated offerings, especially 'pure products' it is the way to go, where price is only driving factor. But is it?

Continue reading "Sourcing: Don't make it a zero sum game" »

April 24, 2013

Pricing Options While Purchasing of Procurement Professional Services: Innovative Pricing Strategies

"The price point defines the sales model. It has to be simple, and you have to know how to make money with it."

Don't all purchasers want to buy products and services which help them save cash while spending? The answer to this would definitely be an emphatic "yes". The main challenge comes into play in the form of a "how". The good news is that suppliers have themselves evolved several pricing models which buyers can choose from to their advantage. This series of blogs will be specifically mentioning a few of the models in favor with suppliers of professional procurement services like BPO services, staff augmentation and project based consulting work.

Continue reading "Pricing Options While Purchasing of Procurement Professional Services: Innovative Pricing Strategies" »

April 16, 2013

ABC of responsible procurement

Continuing on the discussion of responsible procurement (refer my earlier post here), let's start with the ABC of it.

Continue reading "ABC of responsible procurement" »

April 10, 2013

Virtual Market Place - The Next Level in Purchasing Automation

As in the real time marketplace, virtual market places are typically designed to exhibit the actual market dynamics of the given product/service. They combine the use of internet technology with the procurement best practices to simplify the whole procurement process.

Continue reading "Virtual Market Place - The Next Level in Purchasing Automation" »

April 9, 2013

Contract Management: The Perils of Inefficiencies

Now, more so than ever, it is of paramount importance that procurement organizations scrutinize their Contract Lifecycle Management process for apparent inefficiencies and benchmark themselves against world class organizations.

Continue reading "Contract Management: The Perils of Inefficiencies " »

April 5, 2013

Responsible Procurement Makes a Difference

Despite the challenges, there are many good reasons which make the case for responsible procurement

Continue reading "Responsible Procurement Makes a Difference" »

April 3, 2013

Pricing Options While Purchasing Procurement Professional Services: Drawing the Parallels and Outlining the Basics

"The price point defines the sales model. It has to be simple, and you have to know how to make money with it."

Don't all purchasers want to buy products and services which help them save cash while spending? The answer to this would definitely be an emphatic "yes". The main challenge comes into play in the form of a "how". The good news is that suppliers have themselves evolved several pricing models which buyers can choose from to their advantage. This series of blogs will be specifically mentioning a few of the models in favor with suppliers of professional procurement services like BPO services, staff augmentation and project based consulting work."

Continue reading "Pricing Options While Purchasing Procurement Professional Services: Drawing the Parallels and Outlining the Basics" »

April 1, 2013

Head vs. Tails: The Shifting Focus to the Trivial Many

While the Pareto ratio does present a promising proposition in-terms of segmenting spend, are we correctly utilizing it? In most cases we take it a rational basis for us Procurement wizards to choose to ignore a key portion of the supply chain.

Continue reading "Head vs. Tails: The Shifting Focus to the Trivial Many" »

March 25, 2013

Symbiotic Relationships in the ecosystem of Supply Chain Management

Nature has never seized to inspire us mortals; the closer you observe, the more the number of lessons it has to offer in every field of life. Symbiosis is a concept that Supply chain professionals can heavily derive from in order to develop and maintain effective relationships.

Continue reading "Symbiotic Relationships in the ecosystem of Supply Chain Management" »

March 20, 2013

Automate procurement - save big bucks

Automation of procurement can bring big wins. It can reduce costs, increase productivity and maintain high level of operational effectiveness. Business benefits achieved from automation are worth every penny spent on implementing the cost of new technology.

Continue reading "Automate procurement - save big bucks" »

March 19, 2013

What Customers Want From Their Procurement Partners... a Fresh Perspective...

No two clients are the same, and their problems require individual attention with equal precision, from every possible angle.

Continue reading "What Customers Want From Their Procurement Partners... a Fresh Perspective..." »

March 14, 2013

Guiding lights: bridging the gap between Information Technology and Procurement

As companies move closer towards adopting mobile trends and capabilities, they will require skilled and knowledgeable category experts as a "guiding light" in bridging the gap between Information Technology and Procurement who understand the risks and sensitivities of sourcing.

Continue reading "Guiding lights: bridging the gap between Information Technology and Procurement" »

February 1, 2013

Sourcing & Procurement in the Pharma world

For a long time the pharma industry has delivered high profit margins banking on patented and innovative products. However, times have changed now since generic drugs have started entering the market and emerging markets have started gaining prominence.

Continue reading "Sourcing & Procurement in the Pharma world" »

January 17, 2013

The Changing Face of Strategic Sourcing

Gone are the days when the old school of strategic sourcing used to yield results. With the economic crisis and the change in the global supply chain scenario, the strategic sourcing scene has changed from what it was a decade ago.

Continue reading "The Changing Face of Strategic Sourcing" »

November 7, 2012

Procurement and Social Media: the Long Awaited Love Affair yet to Bloom

Social media has unquestionably become a very powerful platform which the businesses can no longer afford to ignore. Companies have extensively indulged in the love affair called social media to market products and services, inform about new products being launched and obtain customer feedbacks. But it seems that the marriage with more complex functions like procurement is still not consummate.

Continue reading "Procurement and Social Media: the Long Awaited Love Affair yet to Bloom" »

October 31, 2012

The Harbinger for Global Sourcing's Success or Failure - the Misery Index

I wonder at times about the limited knowledge of vast majority of Sourcing and Category Managers in one area - global sourcing. Now I don't want to create a controversy here and make a large fraternity cynical of my writing the preceding statement because obviously, all Sourcing managers will have to their credit, some or the other successful global sourcing case study. However, I promise that this post will compel you to think "Do I know this ?", "Have I applied this ever ?" and then validate whether my statement claiming "general limited knowledge" is correct or not.

Continue reading "The Harbinger for Global Sourcing's Success or Failure - the Misery Index" »

October 25, 2012

In the Wonderland of Your Suppliers

Knowing your Suppliers well is the key to effective sourcing and procurement. A Sourcing or Procurement Specialist must have a good knowledge of the suppliers. "Information, as we all know, is power". 

Continue reading "In the Wonderland of Your Suppliers" »

October 23, 2012

Choose a wizard-like procurement partner to succeed or else? Fail...

"We have been sold Dummies!!" - exclaimed Mr. X, flaring nostrils et al. "But Sir, we have a plan and I'm sure the C-Sat scores will definitely come up", muttered Mr. Z, the Account Manager from the Model Services. Mr. X, now all the more worked up - "When we signed this deal, you had provided us with the best of your people to design the plan, process and now people who are working on these requests are stuck at basic terminology and on top of it make elementary grammar mistakes." "Do you even understand as to how I face the CEO with all the ensuing escalations when I am the one who sold this 'brilliant' outsourcing idea to him? What am I supposed to do now?!! "

Continue reading "Choose a wizard-like procurement partner to succeed or else? Fail..." »

October 19, 2012

Purchasing functions: Hulky and Decrepit v/s Right sized and Healthy

As I meet more and more clients/prospects (CPOs, Purchasing Directors, Managers, Buyers) during sales, services delivery, service review etc.; I see two common issue categories bothering them in their function.

Continue reading "Purchasing functions: Hulky and Decrepit v/s Right sized and Healthy" »

October 16, 2012

Can too Much Retailing be bad? - a Supply Chain Professional's View

Should we encourage retailing? And, should we have big players in retailing? Isn't inviting FDI in retailing akin to inviting trouble? Won't such a step spell doom for the economy in the long run???

Continue reading "Can too Much Retailing be bad? - a Supply Chain Professional's View" »

October 8, 2012

Transforming Corporate Travel Programs through Technology

Technology has a key role to play in transforming the tiring travel experiences of the past to one of eager expectancy. In today's time sourcing the right technology combination for one's workforce has become imperative.

Continue reading "Transforming Corporate Travel Programs through Technology" »

September 22, 2012

Negotiation strategies - a cue from our past

Trying to draw a parallel to the four negotiation techniques, I was wondering whether it is mere coincidence or if this bundle of knowledge was indeed systematically transferred over generations to enable us evolve the strategies that we follow today.

Continue reading "Negotiation strategies - a cue from our past" »

September 3, 2012

Curing public procurement of what ails it - a practitioner's view

E - government procurement can play an important part in generating savings and increasing the effectiveness of public sector services, whilst increasing transparency and accountability. It can also create a fairer, more competitive and trusted national business environment, attractive to international suppliers, lenders and donors and contribute in economy growth.

Continue reading "Curing public procurement of what ails it - a practitioner's view" »

August 13, 2012

Sports to Source: An analogy

A sport, they say, is a great character builder. Sports brings out the best professional in us is what I think. But is it any different from sourcing? Not much I think. Right from setting the ground rules (initial forecast / expectation setting), sticking to the rules of the game, following the basic discipline (timelines, budget, escalations), working together for a common goal / co-operation (as in stakeholder management),  perseverance and game strategy (towards negotiation, savings and contracting), there are so many ways we can relate SPORTING to SOURCING.

Continue reading "Sports to Source: An analogy" »

August 8, 2012

Theory of Constraints (Part 4) - Reasons for delay

In this post, I shall be giving some points due to which the projects get delayed in spite of the use of tools such as Gannt chart, etc. So here goes;

Continue reading "Theory of Constraints (Part 4) - Reasons for delay" »

August 6, 2012

The Procurement Olympics - Only a few win and stay ahead of the others

Managing a procurement function and proving its value to the organization continues to be like participating in the Olympics. Procurement teams across all industry verticals (automotive or pharma or healthcare etc.), face the competition every day from internal stakeholders and suppliers like any Olympic Games event. All three wanting to beat each other in deriving positive value to their organizations akin to the national respect athletes long to create by winning Olympic game events.

Continue reading "The Procurement Olympics - Only a few win and stay ahead of the others " »

August 1, 2012

Sustainable Sourcing - Towards Greener Pastures

With rising commodity & energy costs coupled with government regulations & the increasing awareness of the end customer, green or sustainable sourcing has become the need of the day.

Continue reading "Sustainable Sourcing - Towards Greener Pastures" »

July 16, 2012

Rise and fall of the Purchasing function - how can it stand firm?

Even reasonably experienced buyers are working with a mixed bag of results e.g. savings are achieved but not on time delivery; all supplier performance scores are good but stakeholders are still complaining...

Continue reading "Rise and fall of the Purchasing function - how can it stand firm?" »

July 4, 2012

Making procurement savings count

Essentially industry benchmarks have been used to derive contracted savings which are then realized in the sourcing lifecycles of any sourcing projects. These savings can be termed and bucketized under "Sourcing Optimization". But the other side of the coin is the procurement savings which predominantly lies with the P2P technology implementation and compliances.

Continue reading "Making procurement savings count" »

June 27, 2012

Theory of Constraints (Part 3)

TOC does not concern itself with optimization of a particular portion of the company. It concerns itself with the improvement of the entire system.

Continue reading "Theory of Constraints (Part 3)" »

June 14, 2012

Supply Risks - Aim, Focus, Shoot

So how are we approaching supply risks? 

There are different approaches to establish risk management framework for supply chain.  One can argue that the traditional enterprise wide risk management frameworks, which start with identification of risks can be adapted to Supply.  Having seen both sides of the coin, as a Risk Manager and a Sourcing & Procurement Professional, I would tend to argue for a simple yet effective approach - embed your supply risk management as part of your Category management framework and Sourcing Process.

Continue reading "Supply Risks - Aim, Focus, Shoot" »

June 11, 2012

Theory of Constraints (Part 2)

As discussed in my previous blog post, a single point in the entire workflow can choke the flow of work. This point otherwise known as the constraint is to be taken as the most important part of the whole process. In hindi this may be known as "Nuss" or the nerve centre of the entire process.

On reading my previous post you may be think that it is the responsibility of a person (Constraint) to improve or that the person is the reason that the whole process is bogged down. Now it is true that a person can be the constraint but it is also true that the constraint can also be a machine or a policy.

Continue reading "Theory of Constraints (Part 2)" »

June 6, 2012

Greed is good - Particularly for Procurement

As a Sourcing and Procurement professional, I can put my hand on my heart and say that I've been driven by greed to get highest value on my spending and I'm not ashamed to accept that. What about you?

Continue reading "Greed is good - Particularly for Procurement" »

June 4, 2012

Are your sourcing goals futuristic too?

So how did your sourcing function perform this year? 

Our performance indicators are usually measured by targets, that are linked to measurable corporate and functional goals.  For sourcing, typically goals fall into 3 categories - savings, supply and supplier performance.  Definitely these goals aid the annual corporate results year on year.  But do they also cater to the future evolution of the Sourcing function?

Continue reading "Are your sourcing goals futuristic too?" »

May 21, 2012

Theory of Constraints

As my first post, I would like to start on a topic which is of immense interest to me. This is the Theory of Constraints (TOC) which was originated by E. M. Goldratt. TOC is in simple terms, the focused or lazy man's style of doing operations.

Continue reading "Theory of Constraints" »

May 14, 2012

Uncommon and breakthrough purchasing savings levers - Series 4 (Lever - SG)

Objective of the series: Hi there. I plan to share some very interesting avenues through an exciting series of at least 5 blogposts (Depending upon the response, I can consider sharing more). In each of the posts, I will share a few highly impactful savings levers that generate very high level of annualized savings across many industry verticals. These levers are still not widely used just because they are hardly covered in the common Sourcing & Procurement literature or practices. Hope you will find them useful, apply them somewhere and come out with flying colors. Wish you good luck and enjoy the read.


SG - What is SG? I am sure this is an obvious first question in every reader's mind. SG's expanded form is Services Guarantee.

Continue reading "Uncommon and breakthrough purchasing savings levers - Series 4 (Lever - SG)" »

May 8, 2012

Strategic Sourcing Through Keiretsu Suppliers of Toyota

Objective: Hi everyone. By virtue of my coming from Toyota, with which I was associated for a major part of my career, I like to share a few interesting perspectives on Toyota's Keirestsu suppliers. I was fortunate enough to manage key Keiretsu suppliers of Toyota, who continue to contribute significantly to Toyota's progress worldwide. These suppliers are a significant piece in Toyota's strategic sourcing principles. The objective of this blog is to take you through the Keiretsu concept, how would a Toyota sourcing manager manage these suppliers and how would one leverage relationship with these suppliers to obtain long term savings and supply reliability (a TQM philosophy for Purchasing - variability reduction in everything is the prime focus).

Continue reading "Strategic Sourcing Through Keiretsu Suppliers of Toyota" »

May 4, 2012

Procurement Value - A Penny Saved

Benjamin Franklin said, "A penny saved is a penny earned". True indeed, but the common problem faced by CPOs has always been - How to define a "saved penny" or "Procurement Value" as few call it.

Continue reading "Procurement Value - A Penny Saved" »

May 2, 2012

Return on Investment as a Decision Criteria

In most sourcing decisions, the attempt  is to equalize  competing vendors on all the other criteria like specifications, quality, delivery, commercial terms and then apply price as the decisive criteria. However, one criterion that has been used sparingly is Return on Investment.

Continue reading "Return on Investment as a Decision Criteria" »

April 27, 2012

Uncommon and breakthrough purchasing savings levers - Series 3 (Lever - RM)

Objective of the series: Hi there. I plan to share some very interesting avenues through an exciting series of at least 5 blogposts (Depending upon the response, I can consider sharing more). In each of the posts, I will share a few highly impactful savings levers that generate very high level of annualized savings across many industry verticals. These levers are still not widely used just because they are hardly covered in the common Sourcing & Procurement literature or practices. Hope you will find them useful, apply them somewhere and come out with flying colors. Wish you good luck and enjoy the read.

RM - What is RM? I am sure this is an obvious first question in every reader's mind. RM's expanded form is RETURNS MANAGEMENT/REVERSE LOGISTICS. In other simple words, it is about goods and services that are not accepted by buyer post in-warding them into stores/acknowledging work done by services providers. The reasons for this could be multiple. For example, a material/service gets rejected by buyer and returned to supplier for replacement or repair or rework. As per contract, the product might be returned to supplier at the end of life or end of use. Such scenarios occur in each and every industry. Familiar & common commodities that are prone for returns are -- and I'm sure that every reader here would relate to these -- containers, pallets, packaging materials, used clothes, outdated spares, above shelf life items/equipment and vehicles etc. But is this area really uncommon and can it provide breakthrough purchasing savings? Let me investigate that for you. Keep in mind that we are discussing returns management in B2B context and not B2C.

Let's start with a couple of benchmarks and high points that I have collated for you. Sabri and Gupta report in their famous book Purchase Order Management that on an average, 20% of all goods procured are returned for any firm! Obviously in-warding and resending and re-inwarding cycles can have inventory levels inflate/deflate. This is ditto for the firm's profits and demand management sides. Imagine the complexity of a returns management procurement cycle if the suppliers to manage are also international (any one from Automotive firms reading this?)! IPQC reported in 2008 that associated costs of returns can run as much as 10-20% of operational costs of a supply function and that even 1% savings in that could be a huge $ benefit/profit - straight to the bottom line.

So what are the action items/solutions? First of all conduct a root cause analysis to determine the patterns and underlying causal factors due to which returns are created. Then, plan for corrective actions on all fronts - make the processes at supplier's end and the inbound packaging, transportation predictable to six sigma levels. At a category strategy and spend data management level, ensure that each commodity (material or service) in item or service master table is tagged as returnable or non-returnable. The process and technology with procurement should also have traceability and connectivity with AP systems to link PO and Invoice with return and its reason so that debit memo creation can be simultaneous. Items being returned for replacements should also be factored into the procurement and AP applications. Gupta and Sabri recommend that firms should automate processing of the returns upon receipt (including inspection and disposition), speed up the process to reduce risk of obsolescence, and track reverse logistics and net asset recovery to improve effectiveness. If services received are rejected or found to be deficient, the returns management becomes virtual process but should remain same for treatment like products/materials as explained just before. The reconciliation of service return/complaint can be accounted for as a simple apology or monetary compensation - as the contract specifies.

What can you do to have a robust returns management solution? Invite an expert firm to design BIC returns management process, integrated with procurement applications, ERPs and other applications. Choose the firm who can not only recommend (consult) but implement the proposed solution for you and demonstrate benefit. Include them also in returns management spend management plan of yours - for recoveries, repair or replacements!

Found this post useful and refreshing? Want me to write the rest of the 2 posts at least? Then send me your views on this one please. The series has gone well so far in response. Thank you all.

April 25, 2012

Aim, Hit, Goal!

If you ask anyone what the goal of strategic sourcing is, the answer that you would generally get is 'savings'. That might be one of the primary goals in the strategic sourcing kitty but is that the only one? Long gone are the days when the sourcing & procurement department was considered as just an order administration office. Now the sourcing team is proving its worth as a value adding component of the overall machinery of the firm and hence, has been rightly prefixed with the term 'strategic'.

Continue reading "Aim, Hit, Goal!" »

April 19, 2012

Uncommon and breakthrough purchasing savings levers - Series 2 (Lever - DA)

Objective of the series: Hi there. I plan to share some very interesting avenues through an exciting series of at least 5 blogposts (Depending upon the response, I can consider sharing more). In each of the posts, I will share a few highly impactful savings levers that generate very high level of annualized savings across many industry verticals. These levers are still not widely used just because they are hardly covered in the common Sourcing & Procurement literature or practices. Hope you will find them useful, apply them somewhere and come out with flying colors. Wish you good luck and enjoy the read.


Continue reading "Uncommon and breakthrough purchasing savings levers - Series 2 (Lever - DA)" »

March 15, 2012

Uncommon and breakthrough purchasing savings levers - Series 1 (Lever - GSP)

Objective of the series:

Hi there. I plan to share some very interesting avenues through an exciting series of at least 5 blog posts (Depending upon the response, I can consider sharing more). In each of the posts, I will share a few of the highly impactful savings levers that generate very high level of annualized savings across many industry verticals but are still not used widely just because these are hardly covered in the common Sourcing & procurement literature or practices. Hope you will find these useful, apply them somewhere and come out with flying colors. Wish you good luck and enjoy the read.

Continue reading "Uncommon and breakthrough purchasing savings levers - Series 1 (Lever - GSP)" »

March 13, 2012

Enhancing the Fitness of Purchasing Departments - Analogies from Human Life

I am sure any stakeholder to a Purchasing department would rate or view their performance based on their experiences with this department. And obviously, stakeholders could be internal (CXO executives, user departments/budget owners, sourcing & procurement team members themselves etc.) and/or external (suppliers, auditors, consultants etc.).

Not so positive views could be "they are slow, they are impediments, signifying "thou shall not buy" attitude always; they just don't understand what value suppliers can add or what is the importance of what is being bought but seem to be always beating down the prices" etc. Positive and encouraging views could be something like "they are knowledgeable folks always helpful to collaborate for our needs while also making sure that firm gets value on what it spends; they have helped me specify what I need better; they have helped save significant costs when we needed the cash the most, etc.". And then, there could be mixed views like "sometimes they delight me but sometimes they perform in a very disappointing way for a critical project; why do they vary so much?"

Allow me to oversimplify such observations and metrics for a simple, intuitive analysis by rating combined experiences on a "4 point Purchasing Fitness Scale - Run seamlessly (1), Jog comfortably (2), Walk briskly (3) or Walk slowly (4)". If the predominant rating score is 4 (suggest taking the mode and not the average or median here), purchasing department's impression can be termed as equivalent to a BMI 35+ or sick or non-agile human being. On the other extreme, a rating score of 1 will give an image of a person able to run fast and for long distances effortlessly (like Usain Bolt or Belgian Stefan Engels who ran 365 marathons in one year). Imagining the other two rating scores and corresponding fitness conditions should be a mere formality now for the reader of this post.

So what are the mantras to enhance and maintain the fitness of Purchasing departments to be able to run processes equivalent to 1 marathon per day? A simple analogy from life again should help here, which I will describe now (a number of you would have experienced this too I am sure). A sedentary person decides to get active and takes the 1st step. He/she goes for a medical checkup, takes findings from doctor(s), physiotherapists and dieticians to evolve a scientific, practical, diet-fitness-relaxation regime. Firms can do something similar by engaging a specialized procurement consulting, BPO and technology partner firm (specialist doctors, physiotherapists and dietician all available in one hospital). The 2nd step the person takes is to seriously invest time, interest and resources to implement the regime - irrespective of whether he/she has to travel, go to the gym or work out at home, maintain perseverance and discipline whether it rains or partying becomes too much etc. Firms can do the same themselves or take the help again of a partner firm. Invest and implement into best practices based processes, technology solutions, people, information/intelligence etc. Outsource whatever makes you slow / loath and keep in-house whatever makes you faster and better instead. Set targets, measure constantly and report frequently.

So what happens next? Simple and intuitive again. Results start showing up. A person who was barely able to walk, is able to jog and run comfortably over a period of time as a result of following the 1st and 2nd step. Such transformations can be astonishing and are yet very real (I am sure that many of you would have experienced/seen such seminal folks around you). Once again, firms experience the same. The perception of Purchasing department changes along with its overall performance. It starts to be viewed as an agile, fit and ever-energetic department that is always rated 1, as it runs seamlessly to meet the firm's long and short term objectives adding tremendous value.

So get active! Take the 1st and 2nd steps to make your Purchasing department run seamlessly. Good luck to all the readers!

March 8, 2012

The Art and Science of Commercial Negotiations

If you are a buyer, have you ever come across a situation where you enter a commercial negotiation with a supplier, without having any background of the deal, you just hear out the "final best price" from the supplier, ask for a 30% discount and the supplier agrees! Never? Well, unfortunately many users tend to believe that this happens every other day. 

As Purchasing professionals we often come across situations where a user has completed his technical evaluation, has performed product demos, has selected the supplier, has had multiple discussions with him, has "negotiated" delivery timelines and has communicated to him that he stands selected. "However, our Purchase guy will negotiate commercials with you", the user has communicated to the supplier. What are the chances that the supplier would offer fair market price to the Buyer, let alone best commercial terms! None.

Users often misunderstand the concept of commercial negotiation. They believe that it is an act performed in one hour, across the table, where the Purchasing Buyer will use his negotiation "tactics" to reduce the prices. However, this is as far from truth as can be. The negotiation meeting is just a culmination of immense ground work and preparation. Commercial Negotiation is all about analysis and research to arrive at a fair price point and then the "act" of negotiation is just an exercise to make the two minds meet. Preparation for negotiation would involve using one or more levers to make a price assessment. This could involve having a commercial comparative in place, a detailed costing exercise, market index evaluation, historical price movements, previous price references etc. clubbed with market analysis, supplier analysis, geo-political situation assessment and other such tools which enable a scientific approach to the process, based on facts and figures. So, while the final act of negotiation may be regarded as an art by some, but the entire preparation that goes behind that art, is all science.

While many organizations mandate that all buying should happen through Procurement, sometimes it ends up becoming a stamping exercise, where the Buyer spends the final 30 minutes with the pre-selected supplier in negotiations and walks away with some discount. Everybody seems happy. But the fact is that the mandate is followed in just words and not spirit, and the organization loses a lot in the bargain. For the Purchasing Buyer too, there is no learning and no satisfaction of adding much of value to the process. For the negotiation process to be effective, involvement of Purchase should be early on in any sourcing exercise and all communications to suppliers, whether technical or commercial, should ideally be routed only through Purchase. Purchase should consciously distance itself from any deals where it was involved at the last minute, more as a stamping body and just to complete the process of "involving" Purchase. Purchase will never get any credit for all such contracts; whereas if anything goes wrong, it stands to be questioned not only by internal stakeholders but also by auditors.

So, while the art of negotiation may be important across the table, it's the entire strategy and science that makes the art effective; without which, the negotiation is nothing but bargaining aimlessly.

Please share your views on the above. I would be eager to know what you feel and what's the experience / beliefs in general.

March 2, 2012

Infusing Cadence into Professional Services Category Management

Any category manager, who deals with the Professional Services category, would certainly tell you one common aspect about this category - It is the most difficult one to manage across all the Spend categories within an organization. And if you continue the discussion, they will most likely tell you these reasons: "Services specifications are usually vague or absent, eliminating chances for a structured category management; expertise that I am buying is neither defined by user nor by suppliers limiting the visibility; linking contracts to performance is usually missing etc." If you ask one last question "Tell me in few words, what is that one thing that you are missing the most in managing this category?" the answers would all roll into this - "Cadence is missing in the management of this category relative to others."

You will, most probably ask one more question now - "What do you think should be done to get this cadence back?" A plethora of answers will come and most likely in these categories : "Framework and approaches for this category-commodities need to be introduced; Right category managers need to be recruited or capacities augmented; It should be specified clearly that who owns PS spend and supplier management - the stakeholders or purchasing etc."

I am sure that "you" here means someone who is reading this post, could be from a firm that is facing lack of cadence in PS or a procurement consultant and service provider who may have helped a number of firms to provide a solution here. Whosoever you are, you need to know some broad guidelines and that is what I am happy to share through this post.

Unlike standard materials (Direct, Std. MRO, Capital) and usual services (courier, logistics etc.), the degree of complexity of specifications, suppliers buying power and close access to stakeholders are two causal factors that limit the influence/value addition PS category managers can bring in here. When they still want to influence this category under such circumstances, "noise" in the system is created due to resistance from stakeholders-suppliers combine in many forms e.g. "procurement doesn't understand my universe but supplier does so they should leave it to us to directly manage this spend; procurement is good enough to buy standard items/services but not PS; procurement always wants to get lowest prices which is not the case here and value addition is the focus". So one of the best practices could be to clearly identify and list those PS commodities that are best left to stakeholders given their complexity, and if procurement does not have functional experts who have experience similar to comparable stakeholder(s) - within the department (including extended procurement organization of outsourcing partner). The residual PS commodities can be taken as the ones which procurement should influence and with consent of stakeholders.

This simple yet effective approach can bring in the missing cadence and ensure an organization accepted approach to bring PS spend under management to realistic levels. The key here is to identify such have and have-not list of PS commodities for which a one-time project with a capable procurement consultant cum outsourcing firm can be executed.

So what do you think? Look forward to get responses and continue the discussion threads.

February 20, 2012

A critical business link - hire to retire planning for talent in sourcing and procurement (S&P)

Let's face the paradoxical situation that has not changed from the last many years though 2012 has arrived. Effectively skilled S&P talent continues to remain in short supply for most of the firms' supply departments (S&P) themselves.  The not-so-favorable impacts which such a situation can cause are quite intuitive and are mainly - high supply & business risks, and lack of spend % under professional management.

Whether it is the rising economies of India, China, and Brazil or the stagnating major economies of Japan, US and Europe, the situation continues to be the same. Causal factors for rising economies have scope creep and speed level challenges, while major economies suffer adverse demographic factors limiting talent supply (e.g. baby boomers retiring big time post 2010) in addition to flux in their economic situations. Time to look at some credible data points now which details what is being felt within the firms. 47% of the 121 respondents to a survey by Aberdeen reported "lack of staff with appropriate skills" as one of the "barriers to strategic actions for the CPO". In the same report, 34% of the respondents ranked "lack of category expertise in strategic spend areas" as one of the six "top pressures facing procurement leaders". Obviously, the impact of such a state continuing can have impact on procurement performance and as well as at COGS and SG&A levels of firm.

So why does this situation exist and what can be done about it remedially? Simply stating - there are only 2 approaches and solution buckets.  I call the first one as "Do it all yourself approach" and the second one as "Get it done under your control approach".  For the sake of simplicity, let's name the first approach as "Do" and the second one as "Get done". Considering a firm's goals and strategy which approach should it choose and why? There are only 3 criterions in my view - Investments (I), Attention (A) and Procurement Performance (PP) that is planned by firms in the near future. So if the firm is sure that it can provide sufficient quantum and rates of I and A to hire, train, retrain and maintain procurement professionals to achieve the desired PP levels, it should choose the "Do" approach. It should choose the "Get done" approach if the reverse of this is true. A simple weighted average model can be built and surveys run with all the internal stakeholders to quantitatively validate this.

So how to execute whichever approach is found as the preferred one? Simple again. A CPO/decision maker in the firm has to just wear the Sourcing hat. He/she has to compare on a TCO model, how will the firm benefit if "Do" is chosen or if "Get done" is chosen. More often than not, the "Get done" option would be found having the lowest TCO. For example, in the same report, "managing internal staff/procurement department" was rated as "Top costs for the procurement organization" by 21% of the respondents, while "costs of managing outsourcing" was rated least cost by 8% of respondents out of the 6 cost head choices they were given. Conventionally also, S&P professionals know that "buying" is usually cheaper than "making/manufacturing" for non-core/strategic materials as well as services. A third option or combination approach also might be possible to be found i.e. "Do and Get Done". This would be applicable when say for Direct materials and services ,  a firm decides to manage talent supply and development on its own while it outsources all the spend categories (Indirect, MRO, Capital) to a procurement BPO who has established hiring, grooming and training programs. For example, Infosys BPO has an in-house procurement academy where over 1000 procurement professionals have been certified at various levels. Those who need to know more about Procurement performance and maturity may also find this short post useful.

So what do you think? Look forward to get responses and maintain the discussion.

January 17, 2012

Sourcing v/s Procurement- The tug of war

Organizations have come a long way, stepping away from considering the purchase department as an administrative function which is limited to order management, to the current scenario of strategic sourcing and procurement. Sourcing personnel have now begun being involved in the development of requirements, specifications and value analysis (for example, automotive industry leads through concurrent engineering, VA/VE programs perpetually). However, traditional organizations which have a common team which handles sourcing as well as procurement activities often find that the transactional procurement activities take precedence over sourcing. This leads to savings leakages, opportunities lost and compliance issues. The scenario could be because of various reasons:  time and capacity constraints, lack of skilled resources, lack of use of technology tools and non-standardized processes etc.

So, what are the ways out? A clear segregation between the transactional procurement and sourcing departments, outsourcing of the transactional processes and the non-critical activities/categories thus freeing time of the in-house resources to concentrate on more strategic work, and more use of technology like e-sourcing tools, process automation etc.

This New Year might bring in new challenges for the sourcing and procurement functions the world over, but with the best practices being put in place in the function, they would be well versed to meet the challenges head-on.

January 6, 2012

It takes two to tango - is partnering with procurement BPO vital to increase stakeholder satisfaction?

Imagine the typical sourcing and procurement (S&P) function of any firm to be akin to a large ballroom. Also assume all the stakeholders of S&P functions as the spectators who are interested to know how the S&P performs for them and of course want to feel satisfied with the performance. Now imagine that there are 4 performances lined up for the 4 main spend categories -Direct materials, Indirect materials and services, MRO, and capital equipment. After seeing the performances, the spectators are likely to either cheer or boo, depending on their satisfaction levels.

What are the possibilities here? Many varying performance levels as intuitively we can imagine. For example, there could be lot of cheers for say the Direct materials performance but not for others, and combinations similar to this. Another possibility could be that the performances are completely solo (i.e. by a captive S&P team which takes care of all 4 spend categories) or tango (i.e. S&P team comprises of a captive and procurement outsourcing firm's combination for all or few of the 4 spend categories). Various other possibilities also exist around the standards of dancing. The tango could be an Argentine tango or a Ballroom tango where steps, speed and co-ordination differ thereby providing a varying visual treat. The spectators/stakeholders can be qualified experts in both to evaluate the performances objectively or can just view a dance as a nameless performance with expectations of seeing something that is good as per their own standards/frame of references.

Sounds familiar and easy to relate to the usual but complex buyer-stakeholder interplay across most of the firms in any industry vertical (i.e. discreet, process or service)?  What do you think is the likelihood that performances most likely to be cheered would be solo or tango? Why would you think so and what would you recommend to any firm in general and some firms in some particular industry vertical to treat as vital to obtain an all-round, pleasing and non-varying performance?  Invite all to discuss these 3 questions.

January 4, 2012

Is my procurement BPO service provider overcharging me?

This question has come to me multiple times - sometimes explicitly from customers, prospects and from myself when I was an industrial buyer like them buying professional services.  Believe it or not, many procurement BPOs cannot answer this objectively primarily due to the absence of structured FTE (full time equivalent resources) computation methods which are statistically significant, and/or banking solely on their own experience and heuristics. Or it may simply be because they believe higher the better for their business.

A number of buyers themselves do not ask this question in RFIs, cost break downs or just believe on the procurement BPO suppliers' credentials to slip themselves into the comfort zone like "when a renowned supplier like M/s ABC has stated this, there would be some basis for that". On the other hand, various buyers are uncomfortable thinking "I am being quoted for 50 Sourcing FTEs and I feel that this is high. How do I validate that at RFx, during contracting and post business award stages? Although my management has left it to my decision but still...."

So what happens is that some buyers continue to accept higher quotes, hire more # of FTEs from procurement BPO service provider(s) than they should and still be completely ignorant about this problem that is eroding value. Some are ambivalent about this but don't ask this question to procurement service provider(s) and some do ask, but do not get a favorable answer because the procurement BPO service provider may not be driven by objective of creating right value for clients (e.g. a procurement service provider whose leadership is structured on Partnership model will often do this). Some buyers will choose the FTE model while they should have chosen transaction based pricing or outcome/gain-shared based pricing.

One of the CPOs of one of the world's biggest telecom firms asked me this in 2010 and I had the convincing answers - thanks to the S&P CoE of Infosys BPO Limited - of which I am part of.  We were down selected based on our BAFO (best and final offer made on clients' own assessed FTEs) and MSA (master services agreement) was being negotiated. I was conducting an on-ground due diligence in the US and found that in fact the client required 10% lesser FTEs than they had specified and we had quoted for.  So what did I do? Simple.  Just walked up to the CPO and provided him the statistical model that detailed at a 95% level of confidence that 10% lesser FTEs should be fine to meet the given procurement BPO processes, their complexity etc. for next 1 year but that would be required to increase by 30% from year 2 (they had large expansion plans in 2011-2015).

Any views from someone who is facing such a question?

January 2, 2012

Non-value adding procurement practices usually die hard but can be made to die quickly

In my almost 20 years experience, I have worked with multiple stakeholders (clients, suppliers, prospects, internal team members etc.) while executing Sourcing & Procurement related projects. One of the things that I found common across multiple busines verticals was the relatively slower or inactive state of response to modify a non-value adding Sourcing & Procurement processes like purchasing mismatch errors resolution (errors between Contract, PO, Invoice, Payment); following up for obtaining PO amendments; getting quotes on non-structured RFP templates; working with unclassified spend data (e.g. 9999999 item code; non standard item descritions etc.). The other thing that used to surprise me was what I call as the "high tech buy - low tech use" syndrome prevelant across many of the organizations. What this simply means to me is that organizations will buy best of the breed ERPs (say mySAP, Oracle), procurement applications (say Ariba Sourcing Pro, Ariba P2P) at a very high upfront price with long term maintainence and product support contracts, but use just 20 to 30% of their features (e.g. not creating Contracts within ERP but in papers; not leveraging category management workflow capabilities of Ariba Sourcing Pro but just conducting RFIs and RFPs). So I have often witnessed CIOs, CPOs, CEOs presenting proudly that Ariba Sourcing Pro has gone live during last 1 year successfully without even mentioning the adoption rate of its total features.

A seminal quote came from Albert Einstien who paralleled insanity with doing the same things over and over again and expecting different results (e.g. how do we get higher ROI from our investments is still an undisputed goal for any organization but while continuing to work the same old, less efficient, effective or best in class way). One thing leads into another is an old adage. So what seems to be a common, unsolveable problem continuing due to lack of attention, rigor, investment or all of these, is often a business expertise area and model for procurement BPO service providers. Ask anyone of them and they will provide you N number of case studies, approaches and frameworks to not only transform/modify such situations but also add significant value (e.g. sourcing savings, compliance savings, risk reduction etc.) in the procurement performance. I have myself conducted a number of diagnostics, designed solutions, supported stakeholders to implement as well as proudly measure and report these regularly. I do believe that this assesment can be and should be started anytime, in any country and at whatever stage of Sourcing & procurement maturity a firm is. Like mining, one can always find some new oppurtunities everytime one mines. Anyone wants to support or negate the view?

December 23, 2011

Opportunities to improve Procurement Capabilities, Maturity and Performance

While it is obvious that any progressive organization would like to improve their sourcing & procurement (S&P) performance to best in class (BIC) or world class (WC) levels, not many would know the art and science of planning and/or executing it. On top of this situation, there are day to day pressures of meeting supply requirements, supporting other internal mandates and coping up with shortage of procurement skills/people. Whether any organization is in growth or maintenance phase of its lifecycle, this need or desire to meet such challenges remain constant. So what's the way out?

One way out could possibly be to seek external help from a strong partner in procurement who knows not only to measure the as-is situation, but who is also able to present a medium to long term roadmap to achieve breakthrough procurement performance. One important aspect here is alignment of various procurement infrastructure elements (e.g. people, process, technology, knowledge etc.) with other operations/business strategy elements, considering their individual availabilities, capabilities and maturity levels. Alignment and capabilities of procurement elements decide the level of ultimate procurement performance.

Infosys solved such problems for a leading hospital in early 2011 - a 1300+ bedded hospital in Belgium. Infosys S&P experts conducted detailed surveys on-site, administered questionnaires to arrive at statistically significant as-is situation indicators. The road-map to the to-be state was then planned for a 5 year horizon balancing the business needs, investment and ROI goals of clients. For each of the capability improvement phases, incremental benefit streams, organization structures and change management plans etc. were detailed in an actionable, plan vs. actual type tracker. In addition, various sourcing strategies tailored to hospital specific commodities and environments were detailed (e.g. managing physician specified commodities).

The business case forecasted procurement performance elevation to BIC and WC levels in 5 years on parameters like Quality, Cost of procurement operations, Delivery, Savings, Spend under management etc. In addition, the stakeholder value likely to be added was also forecasted. The report was approved by C level executives and implementation is currently on.

So, a great opportunity exists for all firms to invest in something as significant and highly value adding.  Such a project can be real quick also, ranging from 1 month to 3 to 4 months to get the business case with roadmap for approval. Would be eager to know views from you and continue the discussion.

June 3, 2011

Infosys Takes Sourcing & Procurement Engagements to Next Level with Joint Innovation Board

Today as procurement outsourcing matures, buyers are looking to their providers to create additional value. But there is a need for clearly distinguishing between the value proposition for Sourcing and that for Procurement. Buyers can realize benefits from procurement outsourcing very quickly due to labor arbitrage because of the transactional nature of the activities. However because of its more strategic nature, it is on the sourcing side that a provider's technology tools, business transformation, and process innovation can have a multiplier effect in increasing value for the buyer. Clients are realizing this and we are seeing several major trends. Clients are asking for business-outcome based relationships, they are asking for help in transforming their businesses, and the nature of work that they outsource is also becoming more complex, requiring more expertise.

We are also seeing that clients often go beyond their initial contracts and sign up for long-haul transformation roadmaps when they begin to gain confidence in our expertise. As the relationship matures we also gain confidence that clients will invest over the long term. This confidence building happens faster when the relationship has visibility and support at senior management levels on both sides. Once clients are comfortable asking us to deliver more value, we move on to setting up a dedicated innovation program - a procurement innovation board - with dedicated resources to drive transformation and innovation. This typically happens in large strategic engagements and here the innovation board prioritizes ideas and helps secure funding to implement them. For clients with smaller engagements we offer a lot of flexibility and help them experiment and gain confidence to grow into larger engagements. 

In a recent chat with Kathleen Goolsby (Editor of Outsourcing Buzz), my colleague Srikrishna (Kris) Koneru and I, spoke about these recent trends in the Sourcing & Procurement space and how mature client engagement can drive larger more transformational deals. Click here to read the interview.

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