January 22, 2013
We might expect businesses to take every opportunity to deliver stretching and sustainable cost reduction, never more so than in times of austerity.
Purchasing managers I have met tell a different story. Most have cost reduction objectives and many receive bonuses based on it. The target set is often 5 per cent, which is hardly stretching, on the basis, presumably, that 10 per cent seems too much and 0 per cent is not a reduction.
Salespeople have also asked me: “What is this ‘buyer’s 5 per cent’ we are asked for?” Sellers often respond by adding 10 per cent to their price so that they can take 5 per cent off: the target is achieved, everyone gets a bonus and the price goes up. (more…)
May 4, 2012
I am often asked about supplier relationship management (SRM) and how to maximise results in this area. It is a topic of much debate and a Google search finds over six million results, so it can be hard to know where to start.
Organisations often fall into the trap of improving their SRM meeting structures and reporting processes without actually focusing on the accuracy of their underlying KPIs. (more…)
April 5, 2012
Supplier management is often the poor relation of strategic sourcing and category management. But it is an integral part of best practice in procurement and essential if you are going to get the maximum value from your supplier relationships. Few companies take a structured approach to supplier management, but when a medium to long-term view of the value each relationship could deliver is taken, such an approach can deliver competitive advantage. (more…)
February 1, 2012
How encouraging it is to see SRM and risk management being recognised among the main levers of procurement’s business contribution according to the Supply Management 2011 Reader Research and this month’s news focus. (more…)
September 23, 2011
The other day I responded to a question from someone in my network who was interested in whether “ownership” of particular suppliers is defined by the sector the buyer is operating in – as if some sectors have a magic ingredient that makes procurement’s role clearer and easier.
This question arises time and time again in my SRM client work. I think it’s the wrong question to ask. If there is a distinction regarding ownership, then we should look at the split between direct and indirect products and services. (more…)
September 28, 2010
What happens if you threaten to punish an outsourced supplier? Does its performance improve or get worse? For the purposes of answering this question, which I looked at in my MBA dissertation, “punitive measures” should be taken to mean contractual measures to secure adherence or deter non-performance such as service credits.
When an outsourcing contract is first implemented, the outsourcer is mostly viewed as a direct extension to the customer’s internal IT team. This is a hindrance to maximising the business value of deals because experience shows the customer will typically micro-manage the outsourcer. (more…)
August 20, 2010
Apparently a US company has created a “divorce probability calculator”. Cheerful eh?
It reckons it can work out with only 13 per cent of error the chance of your marriage breaking down, once you give it information like age difference, any history of depression, race difference etc. (more…)