Managing Supplier Risk

We are pleased to announce that the fourth and final Tejari Online Briefing on 'Managing Supplier Risk' is now live!

The final online briefing in the series hosted by Tejari Pakistan Assistant Manager Business Development Usama Shahid covers:

• A recap on the first three briefings
• Defining what risk is
• How you can identify, manage and mitigate your risks
• Some takeaways from the briefing

Watch the briefing by clicking on the button below

Access Online Briefing

eProcurement Enhances Organizational Performance

Web-enabled applications for business-to-business (B2B) procurement are not only expected to reduce the cost of purchasing process but also to alter the activities of purchasing, transform the purchasing process from an operational into a strategic activity and provide opportunities for improving market coordination by reducing asset specificity and by making additional partners available. The results driven through implementing Web-based e-procurement system not only enhance the performance of the buyer organization but also enhance the performance of the supplier organization and improve partner relationship management.

Common Challenges in Procurement Cycle

Authored by  Junaid Khan 

Complaints and problems are natural part of every business. But on other side complaints and problems gives a us a chance to change the things and decisions. In the Material management we can elucidate this as reevaluating the existing procedures and approaches in orders to contribute more to corporate success. Below please find the review of some common challenges. 

Advantages of eProcurement

Authored by Usama Shahid

E-procurement advantages are becoming more evident as the wider understanding of its many uses become apparent. The main reason companies have embraced e-procurement is to increase productivity, provide visibility into day-to-day transactions and make it easier for users to get the supplies that they need.

It has not been an easy road for e-procurement as implementation has its challenges and it has taken time for business managers and procurement departments to fully accept it. The advantages of e-procurement are slowly being understood:

Risk Management in Purchasing Process

Authored by Fahad Amjad

One of the Key functions of supply management is to ensure smooth and uninterrupted flows of goods and materials. Today, organizations operate in increasingly complex and uncertain environments with high risks of supply disruptions making supply management an increasingly Very complex task. 

Grand Performance Procurement Risk Management

Risk is an essential part of business as we know it is a reality that has to be faced by every organizations without risk no business can exist in the market, for growth , opportunities, and to compete in the market companies need to take chances.

Not an Option, But a Necessity

In today's global, dynamic economy, it is beneficial for companies to operate a supply chain that is both Lean and agile. Using Lean and agile in combination is known as a hybrid supply chain strategy.

5 Most Powerful Techniques of Procurement Cycle

Authored by  Junaid Khan 

Management in any company must understand the art of purchasing products and services. The planning, purchasing and marketing are the key stages of good procurement exercise. The procurement cycle follows specific steps for identifying a requirement or need of the company through the final step of the award of the product or contract. For every procurement project, a formal and professional procurement process will save time, save money and reduce risk. Responsible management of public and corporate funds is vital when handling this necessary process, whether in strong or weak economic markets. Many businesses use automated tools such as an Enterprise Resource Planning (ERP) system and Electronic Data Interchange (EDI) to assist procurement specialists or buyer with the buying activities. Regardless of whether an automated system is used, the goal of the procurement process is to buy the exact product or service when needed for the most favorable price. Following are ten proven step by step techniques through which an organization can successfully achieve their goals.

Managing Procedures & Resources through ERP

Now in the fast growing world most of the developing industries need managing procedures and managing resources in a systematic way.it is very basic need of the companies and industries to have a specific tool to help and coordinate specific activities and tasks.

Relationship of Buyers with Vendors Attenuate Purchasing Risks

Authored by Fahad Amjad

Buyers should encourage vendors to mitigate risks themselves by including a risk management element in the overall sourcing process. Managers could give themselves a basis for shortlisting vendors in a tendering process by incorporating a risk management  element requests for proposals (RFP), asking vendors how they would stop risks transpire and how they would reduce the impact if they did happen.

Global Sourcing Strategy – Could be Game Changing for Procurement Department

Authored by Usama Shahid

Implementing a successful global sourcing strategy is very different than sourcing from a foreign supplier which is a short-term solution.

Risk Anticipation and Rapid Mitigation in Supply Chain

Speed of response is a critical capability of dynamic supply chains and the key to mitigating risk and swiftly implementing the changes that will make the supply chain still more resilient. But response time hinges on the company’s ability to proactively identify high-risk events, and to decide whether to design the operation to flex to known risks—those that are unpredictable but relatively more likely to occur—or to have contingency plans for the unknowable—risks that are unlikely to occur but are potentially catastrophic.

The Impact of eCommerce on Supply Chains

Authored by  Junaid Khan

eCommerce has already a transformational impact on the way that most companies do business. Change has been rapid and fundamental, partnerships and business governance. As the economic assumptions that formed the basis for success in the old world are being overturned, eCommerce is increasingly affecting the way in which supply chains operate. Interaction and collaboration costs have been slashed. Physical assets are no longer the cornerstone of competitive success and value propositions. 

Maximizing Sourcing Value

So, to recap – this is the 3rd briefing in the 2014 series of industry briefings. Previously we were walked through ‘DiscoveringOpportunities through Spend Analysis' by Majda Belghar and then Henry Shepperd discussed 'Managing your Supplier Community'.

The common category discussed in the briefings to date is Facilities Management and in this briefing we attempt to retain that link as we move on to the tendering phase and beyond.

This briefing will go into detail around what value is and the various tools available and when it's appropriate to use them.

Access Online Briefing

Look out for the final briefings in the series on Managing Supplier Risk coming up in November!

Tweet

Marketing Procurement Managers Ensures Cost Savings

Authored by Usman Ghani

A recently survey defined that around 42 percent of the companies use marketing agencies for there procurement.a marketing procurement managers are mostly technically goods in generating results in healthy procurement, they can manage and create strong relationship with vendors, there intellectuals are good with vendors and in the market.

Spend Management Strategies

 

Today many businesses are looking to cut costs by reducing staffing and lowering the quality or quantity of products sold. The studies have found that those methods are not a long term solution nor do they lead to growth. Instead, companies those are most successful look for ways to lower costs by finding and cutting unneeded or excess spending and to reducing costs of materials through volume discounts and automation of supply chains. 

Real values of eProcurement and Strategic Sourcing

Authored by  Junaid Khan

eProcurment is the value-added application of eCommerce solution to facilitate, integrate and streamline the entire procurement process, from consumer to supplier and back again. eProcurement initially become synonymous with the automation of order placement transactions, often referred to as eRequisitioning or eTendering. eRequisitioning enables users within as organization to use a simple web browser tool to place orders with suppliers from an electronic catalogue of pre-negotiated items. eRequisitioning applications have been used but many companies to introduce a common, simplified system-based purchasing process to reduce the maverick buying that is prevalent in indirect procurement spend areas.

The Most Effective Cost Reduction Tip is first to stream line your Supply Chain Process

Authored by Usama Shahid

Over the past years I have looked at the sourcing, procurement and payments processes in different companies from various industries. 

Provocation of Supply Chain Management

Authored by Fahad Amjad

Current supply chains are growing in  convolution due to many factors. The customers are demanding unconventional products at their earliest and at a reasonable price. This factor creates challenges for companies since creating both responsive and cost-effective supply chains is critically very  difficult. Few of challenges has been highlighted in this discussion.

Cost Savings and Methods of Calculation

Authored by  Junaid Khan

While cost saving may seem to be a tactical measurement, it is a component of value that is tangible. Some organizations only permit the reporting of hard savings, which result from the negotiated reduction of amounts already contracted with a vendor. Other organizations result from negotiated reductions in a vendors initially proposed pricing. Many organizations combine hard and soft savings, and simply use the term “cost savings” to refer to the collective savings. 

Top Tendering Tips for Suppliers

While responding to tender documents, it is important for bidders to read the documentation carefully to ensure that their organization reasonably responds to tender and delivers the work required. Here are some of the tips for bidders to be considered while responding to tenders:

Significance of Procurement Planning

Authored by Fahad Amjad

Procurement planning is the process which used by many organization to plan purchasing activity for a certain period of time. This is usually completed during the budgeting process of organizations. Each year, departments are required to request budget for staff, expenses, and for the purchases of different items. This is the first step in the procurement planning process. Procurement plans can be prepared in many different formats. The important thing to remember is the content while this planning. Procurement plan should cover all the different steps in the process with the expected date of initiation of each milestone.

Vendor Management – How Do You Score Your Vendors?

Authored by Usama Shahid

Some companies believe that it is the management of vendors in order to achieve better prices and terms. Others believe that vendor management is building a relationship with your vendors in order to obtain mutually beneficial interactions.

Reducing the Risk of Supply Chain Disruptions

For supply chain executives, the early years of the 21st century have been notable for major supply chain disruptions that have highlighted vulnerabilities for individual companies and for entire industries globally.

Evolution of Material Management

Authored by  Junaid Khan

Material management is an essential business function and it is concerned with planning, acquisition and flow of materials within the supply chain. Material is one of the four basic resources (labor, material, equipment and capital) of any industrial of business activity. For a long time, it was regarded as a routine function with less importance but over the years, with accelerating economic, technological, societal and environmental changes, this function has become more important, more complex and more professional.

Procurement Managers with Toughest Job

Authored by Usman Ghani

The most basic job for most of the employees in procurement management is to establish such strategies which are sensible and more approachable to buy their goods and services, but it is not an easy task for the management of the concern department, because this department is answerable to all departments of the firm, most of the organizations in all over the world have almost the same criteria.

Collaboration between Finance and Procurement make the Best Strategy

Authored by Usama Shahid

I believe that procurement and finance should understand to work together and share information. But, that collaboration is still, in general, rather superficial and intermittent at most companies. To maximize the total business impact that can be achieved with procurement and supply management, the supply management organization cannot work alone. Finance is often the most important internal “partner” with procurement or supply management organization.

Significance of Pre-Qualification

Authored by Fahad Amjad

Pre-qualification is the process of up-front identification of best of rest suppliers able to compete for specific types of contract opportunities. Prequalified suppliers are those whose record of performance in the marketplace, whether commercial or governmental, demonstrates their ability to perform to consistently high standards of quality and reliability. Selection of the right suppliers is very critical process. Having the right choice of suppliers reduces operational risks. Prequalifying suppliers enhances competition, ensures quality performance, and can also shorten cycle time and strengthen relationships between the buyers and its suppliers.

Managing your Supplier Community

Having identified a category for savings facilities management in our last industry briefing on Discovering Opportunities throughSpend Analysis, how do we manage the supplier base in this category effectively to ensure that we generate value, drive savings and build lasting effective relationships with key suppliers?

This briefing on Managing your Supplier Community delves into why we carry out supplier management, how supplier management applies to the strategic sourcing process, what tools and techniques can be used for supplier engagement and highlights some best practice tips for successful supplier engagement.

Login to the online briefing room

Look out for the final two briefings in the series on Maximizing Sourcing Value and Managing Supplier Risk coming up in September and November!

Tweet

Purpose of Procurement Review Committee

Authored by Usman Ghani

Procurement review committee (PRC) an administrative action which established the terms and actions of the procurement policy.

Techniques to Improve Suppliers Performance

Authored by Fahad Amjad

Supplier performance is very much essential for the progress of any organization to stand among the best in the rest. Here are few practices that can be helpful for the improvement of suppliers performance:

Cloud Computing and Procurement

Authored by  Junaid Khan

Cloud Computing allows a company to have all of their Procurement applications (eg: ERP system, Desktop Applications) and other data (contracts, tenders, emails, folders) provided as an online service from anywhere with an internet connection (computers, phones, tablets etc), through off-site dedicated servers (known as a cloud).

A Better Way to Negotiate!

Authored by Usama Shahid

Senior procurement professionals would agree that this is the preferred way to handle alliances and strategic supplier relationships, which collectively account for a large proportion of supply chain spending.

It’s apparent that those suppliers’ teams are making the time to cover every possibility they can think of. The team on the other side of the table? Not so much.Nobody should ever underestimate the importance of securing the support of top management and the heads of the business groups impacted by the negotiation.

Eid Mubarak from Strategicsourcing.pk!

EID-UL-FITR is celebrated on the first day of Shaw'waal, at the completion of Ramadan. The Eid-al-Fitr is a very joyous day; it is a true Thanksgiving Day for the believing men and women. On this day Muslims show their real joy for the health, strength and the opportunities of life, which Allah has given to them to fulfill their obligation of fasting and other good deeds during the blessed month of Ramadan.

Have a blessed EID-UL-FITR everyone!

Tweet

Roles and Benefits of Out Sourced Procurement

Authored by Usman Ghani

Supply chain is a hot and complicated topic and has to be understood its core values and importance in today’s market. One’s company target would be to lead in the market here we have some personal understanding regarding outsourced procurement to how cut or reduce the costs.

Effectiveness of Marketing Spend

Authored by Fahad Amjad

Marketing spending is an organization's total expenses on  marketing activities. This usually includes advertising and non-price promotion.  It also sometimes includes sales force spending and price promotions. 

Discovering Opportunites through Spend Analysis

Tejari Pakistan is back for a second year with their series of free online briefings aimed at Procurement and Supply Management professionals within the Middle Eastern Region. The series was a huge success last year with briefings on Running Successful eAuctions, Best Practices in Programme and ProcessManagement and Visibility through Contract Management.

What can you expect?

Top Tendering Tips for Buyers

Authored by Azra Sultan

The primary objective of an efficient procurement policy is to obtain goods and services at the lowest possible price and to achieve the best value for the money spent ultimately. Buyers need to sure that they are providing the right information to vendors helping them to meet this objective. Here are a few top tips for tendering:

Strategic Spend Analysis Mechanism

Authored by  Junaid Khan

The Spend Analysis mechanism works through data mining algorithms and allows the improvement of many aspects i.e. better understanding of spend patterns, identification of key suppliers spend visibility until the point of order, accurate categorization which outcomes are important savings for the company. Understanding the components of spend analysis mechanism is very important before the implementation of different other solutions. Jason Busch, Widely recognized as the leading expert on spend management wrote in a recent article about the roots of spend management technology at spendmatters.com. He noted that the initial goals of spend analysis software were to build a tool set that would include the following capabilities.

Cultivating Relationship with your Vendors

Authored by Usman Ghani

Vendors are very critical and important to your business they can generate business and can be ideal for your company if you have a strong relationship build with them,here we have some tips for making strong relationship with your vendors.

Purchasing Best Practices – Ways to Increase your Cost Savings

Authored by Usama Shahid

Why do you need purchasing best practices? Well because purchasing cost can greatly benefit on company’s profits. Every time you save money on purchasing you are directly contributing to a company’s bottom line. One Dollar saved is One dollar earned.

Importance of Supply Chain Management in Global Economy

Authored by Fahad Amjad

Supply chains are backbones of the global economy. Their complication and critical role have businesses and governments progressively concerned about managing major disturbance. This calls for a better strategy around flexibility to build agile, transparent and expand systems. Supply Chain Management is an essential element to operational efficiency. SCM can be applied to customer satisfaction and company success. supply chain management is the most critical business discipline in the world today, the impact that SCM has on business is significant e.g. SCM impacts customer service by making sure the right product variety and quantity are delivered in a timely way, it has also tremendous impact on the bottom line as well, also cash flow is increased because if delivery of the product can be quicken, profits will also be received quickly.

How to Manage your Supplier Scorecards

Authored by Azra Sultan

Supplier scorecards are an essential component of the supplier performance management (SPM) function. In order to achieve business excellence, measuring and tracking supplier performance is a key ingredient of the process. At the same time, the matrices which are designed to derive optimal results from a supplier scorecard should also be aligned with organization’s goal, business requirements and SPM strategy. 

Gain Competitive Advantage via Implementing eSourcing Technology

Authored by Usama Shahid

During the past two decades, companies have adopted different strategies to rationalize and consolidate their supplier base. In many cases, the supplier rationalization programs have  created a single sourcing strategy for many commodities. This strategy has enabled companies to build stronger and more collaborative relationships that deliver a range of benefits, including:

Negotiating Tactics Can Be Learned Through Vendors

Authored by Usman Ghani

Most of the companies often do not understand the logic behind the pricing of commodities with suppliers or we call it negotiation,Specially the departments deal in Procurement/Logistics. Supplier may have many logical reasons to reduce his price,most of the suppliers will often realize you that the first price offered to you is the best price reduction according to him and the buyer should accept it without any doubt. Companies used all there reasons to reduce the prices of the items/Services but the vendors has the more defending power for his prices so at the end you run out of reasons for getting lower prices.

Characteristics of Supplier Survey

Authored by  Junaid Khan

Supplier Evaluation often follows a rigorous, structured approach using formal surveys. An effective supplier survey have certain characteristics. First, the survey should be comprehensive and include the performance categories considered important to the evaluation and selection process. Second, the survey process should be based on KPI’s defined by buyer organization. A third characteristic is that the item and the measurement scales should be reliable. This refers to degree to which different individuals or groups reviewing the same items and measurement scales will arrive at the same conclusion. Reliable evaluations require well-defined measures and well-understood items.

Craftsmanship of Price Negotiation

Authored by Fahad Amjad

Negotiation is a basic, generic human fuss that everyone engages in. Good negotiating skills are essential to the smooth running of your business. You need to be able to negotiate with many different types of people in many different business situations - whether you are negotiating a loan from your bank or the next pay rise with a union or staff representative. The skills, once learned, will stand you in good stead. The most familiar approach to negotiation is positional in which each side adopts conflicting positions on pertinent issues and strive to convince the other side to accept the persuader's preferred position. Some people are quite skilled in positional negotiation and are able to achieve their goals most of the time using positional techniques. Moreover, successful use of positional techniques is difficult to sustain. Positional bargainers develop reputations that reflect their negotiation approach. Individuals facing negotiators with such reputations are very vigilant, distrustful, and reluctant to share information that can lead to agreement. Individuals typically view negotiations with positional negotiators as competitive challenges and strongly resist positional efforts to change their positions. Often the result of such encounters is a breakdown of negotiation and no agreement. When this happens, there are no winners.

Maintaining Strong Relationship with Supplier, Striking the Best Price for Company !!

Authored by Usama Shahid

Supplier is a central point of procurement activities and processes. But, it is surprising how few organizations really think like that. Yet the performance of a supplier has a huge impact on an organization’s success and will ultimately determine how the procurement function and its leadership will be regarded by the business. Suppliers are more important than ever in today’s economically uncertain times – particularly when that business relies on its suppliers to bolster its own image, reputation and bottom line. A supplier’s price, quality, reliability, technology, and industry knowledge can offer a business an advantage over its competitors.

Key to Success of eProcurement

Authored by  Junaid Khan

In today’s accelerating world economy, manufacturing companies are facing with the market realities of ever more demanding customers, shrinking product life cycles and steep price erosion. Companies drive to continually cut costs and focus on core competencies has driven many to outsource some or all of their production. Many eProcurement tools are there in market which bring transparency through different module in competitive bidding environment. Standard request for information (RFI) , request for quotation (RFQ), reverse and forward auctions enable buyer to save money by aggregating suppliers together in one online platform to compete for business. eProcurement always reduce written procedures offers costing options that auto generate order plans. Below are some important tips for success of eProcurement process.

Key Performance Indicator ( KPI ) Strengthen Procurement Process

Authored by Usman Ghani

As we all know that evaluating performance indicators in procurement is a compiled but complicated process. It is important for that data to be actionable and measureable. After working on several KPI’s we have found some multiple indicators divided into Quality related KPI and Cost related KPI’s.

Is Procurement A Good Choice For Females As A Profession?

Authored by Azra Sultan

I just wanted to share an interesting article about a survey last year on female representation in procurement. The survey reveals that the women in purchasing earn 70% of their male equivalents in year 2012 whereas they earn 77% of their male counterparts – a seven percentage point improvement on 2013. Although it’s a slow improvement yet a positive sign but females still comprise of a small ratio as compared to male CPOs worldwide.

Fair Practices in Procurement Leads to Transparency and Efficiency

Authored by Usman Ghani

Open, Transparent and Fair environment is healthy for procurement system, and should be conducted in the same manner. Modern practices and principles enforce to underline unrestricted environment in procurement system. It is a broadly accepted principle of all time.

Transparency :

Can be defined as timely ,easily understood to the available information, it also protects the image of the process and the interest of the organization, Stakeholder and the public.

CFO’s of all organizations almost have the dream to reduce millions of money in costs, through different ways and to become the most attracted leader of there organizations in a shortcut ways few simple rules to be followed by the CFO’s to retain the attention in the procurement sector.

Relationship Through Performance Management

Authored by  Junaid Khan

In simple words Performance Management can be defined as the process of evaluating, measuring and monitoring supplier performance and supplier’s business process and practices for the purposes of reducing costs, mitigating risk and driving continuous improvement in your purchasing process. The relationship between a large complex organization and its key suppliers is normally more than just "strategic". A Vendor is a third party that supplies products or services to an enterprise. These products or services may be outsourcing, hardware, software, services, commodities, etc. Vendor management is a strategic process that is dedicated to the sourcing and management of vendor relationships so that value creation is maximized and risk to the enterprise is minimized. This process requires dedicated effort from the enterprise and the vendor.

People, Planet or Profit! What is the Priority?

Authored by Azra Sultan

The organizations spend huge money to deliver high quality, and achieve value for money, goods, services and sustainable savings. The objectives stimulate the markets to develop strategies and innovative processes which support triple‐bottom line outcomes. The triple bottom line i.e. people, planet and profit was first explained by John Elkington in his 1997 book "Cannibals With Forks: The Triple Bottom Line of 21st Century Business". It's a bottom line that continues to measure profits, but also measures the organization's impact on people and on the planet. Triple Bottom line Procurement is a strategic approach to meet organizational objectives through procurement as it involves using procurement processes and purchasing power to generate positive TBL outcomes in addition to the delivery of efficient goods and services. It is the right time to take steps towards triple bottom line and ensure TBL Procurement readiness through securing leadership support, building awareness and understanding across the organization. At the same time organization’s procurement policies, frameworks and process also needs to be reviewed to incorporate social outcomes and early identification of TBL opportunities through strategic procurement. 

ERP Systems Can Magnify Data Vision, Improve Managerial Effectiveness

Authored by Fahad Amjad

Poor data visibility is something that can have an effect on an organizations entire operations process, whether from technology point of view or sales activity. With increasing competition globally and margins for error is less the wrong selection can create negative impact on entire organization. Data visibility is a key to any important decision-making process, however it not only includes having access to all the relevant information, but having pertinent information available at the right moment. Andy Lewis, CIO of Kovarus (Integrated IT Expertise) said “It is critical to first understand where you are now and how you can adapt what you have before you can effectively adopt and integrate new technology innovations”.

Procurement Strategy For Single & Sole Source Supplier

Authored by Usama Shahid

Most of the times Procurement professional faces hard time especially when they are in a process of negotiation with single source supplier and that even get worse when commodity is highly consumable. So here is the strategy which can help procurement specialist to negotiate with single source supplier.

Market Trend of 2014 with SaaS

Authored by  Junaid Khan

SaaS, or Software as a Service, describes any cloud service where consumers are able to access software applications over the internet. The applications are hosted in “the cloud” and can be used for a wide range of tasks for both individuals and organisations. Salesforce, NetSuite and BravoSolutions are the best examples of SaaS, with users able to access the services via any internet enabled device. Enterprise users are able to use applications for a range of needs, including accounting and invoicing, tracking sales, planning, performance monitoring and communications.

Adding Value Is Important Than Saving Cost!

Authored by Azra Sultan

Nowadays it is very critical for organizations to control their expenditure and identify new sources of supply to achieve cost savings. At the same time, it is imperative for product or service provider to demonstrate value for money for its customers where they cannot compromise on the quality of their offered products and services. Vendor relationship is one of the key factors for adding value to organizations purchasing process and for a successful vendor relationship, it is crucial to communicate your organizational goals, business vision, and your expectations to vendors. This will surely encourage them to work harder to improve the quality of supplied products or services as knowledge about customers goals can always help vendors to make the best decision in customers favor.

The most important factor to keep vendors’ interest intact in your business is to answer the vendors’ queries as promptly as possible. This will surely give them a sense of confidence and trust you have developed by making them a strategic partner in your organization’s success. Also avoid delays in payments, unless unavoidable, as it strains relationship, however an amicable solution for an appropriate payback period can be discussed with the vendor to minimize an adverse effect of squeezed fund position on all stakeholders. The Supply Chain Teams should also show loyalty to vendor by frequently giving them business resulting into enhance motivational level, vendor may return the favor by offering discounts and incentives. This is how you add value to your purchasing process by ensuring timely and effective service by the vendor which is more crucial than cost savings most of the times.

Tweet

Vendor risk Management - “Ensures Value for Money & Manages Complex Risk”.

Authored by Usman Ghani

Vendor Management plays strategic role in supply chain efficiency. Managing vendors can increase cash flows, provide excellent service,improve reliability of supply it also helps in reducing reliance on capital assets and can be an alternate source.

Companies can greatly be benefited by implementing Vendor Management:

Finding Cost Savings Opportunities Through Maverick Spend!

Authored by Azra Sultan

Have you ever thought of motive behind maverick spend by an employee? Maverick spend refers to purchases made while deviating from organizational procurement policies and procedure. It is hard to hear but it's management's fault; the internal processes, inefficiencies and lack of controls are the reasons behind the maverick spend. The personnel practicing maverick spend is considered as an offender who precludes purchasing contract and organizational policies which ultimately contributes towards raise in costs. Well it is often observed that there is another group - with no malicious intent; yet flout a company's purchasing policies. 

Just think about the opportunity available through maverick spend. Yes, it is absolutely possible, provided a purchaser is determined to induce new sources of supply and put the existing contractual vendor in a furious competitive environment enabling them to rethink their sales strategy and bring down the cost which ultimately adds up to your bottom line. While working with various organizations, I have experienced where on one hand procurement professional opted to go for maverick spend yet had found an opportunity through visibility into supply industry to further bring down the cost. 

Do you have any experience to share where the maverick spend turned into cost savings? Please do share with us!

Tweet

Supplier Can Provide Real Value To Your Organization

Authored by Usama Shahid

In many organizations procurement department start training their suppliers to improve their efficiency and performance. So they can get the better results from their strategic vendors in the shape of timely deliveries best quality by eliminating other risks. 

Last weekend, we had a wonderful gathering with the bunch of folks from Sourcing and logistics Departments of some nonprofit organizations. They randomly started discussing about the importance of well-groomed supplier in their daily supply chain cycle and I am very much agree with their prospects that “Supplier should be consider as a central point of procurement”. 

Procurement & Sourcing: Still Too Focused on the Primary – Cost Reduction and Savings

In a recent ISM Study, 545 businesses cited their top three priorities for 2013:

• Improving Cost Reduction and Savings.
• Revenue Growth and Profit Improvements.   
• Risk Management.                                                                                                               

Interestingly, 60% of respondents noted Improving Cost Reduction and Savings was their number one priority. There was a large drop to 30% of responders who cited Revenue Growth and Profit Improvements, and 28% of responders focused on Risk Management, to finish the top 3. Similar to the elections of 2012, most are focused on the front runners for the primaries, disregarding the secondary candidates and “rest of the pack” in terms of priorities. Typically the secondary and rest of the pack are a critical focus and need attention, as these are becoming important and can have a critical impact in the near future.

In 2013, companies still see Cost Reduction and Savings as the focus for their Procurement and Sourcing teams. While Cost Reduction and Savings is a key part of the Procurement and Sourcing function, it isn’t the only one. It is apparent that Revenue Growth and Profitability has moved up in terms of significance, surpassing Risk Management; however optimistic, it is still relatively low in the minds of the masses.

While an impact to profitability can be felt with a focus on Cost Reduction and Savings, so too can an impact on revenue when one is focused on the right sources: purchase part and service cycle time and time to market. The point is the majority of companies are still too focused on one aspect of Procurement and Sourcing, leaving an opportunity to fuel more growth and supplier relationship improvements on the back burner.

The good news is revenue and profitability together are becoming more important for Procurement and Sourcing, signaling a change in the C-Suite’s perception: Procurement and Sourcing is critical to meeting the business forecast.

 
Tweet

Even The CFO Is Focused On Risk!

Authored by Mickey North Rizza
  
Risk continues to be a hot topic for businesses; but like the old adage about EF Hutton, when the CFO starts talking, people start listening — or in this case, start strategizing for the future.

At a recent Wall Street Journal CFO Network Conference, attendees noted four critical aspects to prepare for global business risks: Thinking regionally; Cyber-security; Manage the supply chain; and Interrelated risks. Each area was well defined, but also left some room for further thought.

Think Regionally – Companies should align strategies with governments of countries in which they operate and spend more time developing regional (not global growth plans). A prime example is Chip Starnes, CEO of Specialty Medical Supplies, who was literally held captive by his Beijing workforce. The workers were upset because the employees did not believe they were treated fairly. The company moved part of its Chinese factory to India, laid off 35 Chinese workers whom all received severance packages. But according to the workers, the company didn’t guarantee the remaining employees who are still employed the same severance package.

Cybersecurity – Companies should tackle their own threats, push for government intervention and seek pacts between governments on the issue. There should be a limit on who has access to information. The recent US Government concerns over the National Security Agencies issues with Edward Snowden are just the tip of the iceberg on security, not to mention the intelligence and cyber concerns created by this debacle.

Manage Supply Chain – The supply chain should be part of a regular risk assessment and have redundancy built in. Also companies need to assess risks in business processes, so that fragility and volatility of regional economies is understood. Many companies are shortening their supply chains with localization efforts that provide more flexibility to manage demand and supply, thus reducing exposure.

Interrelated Risks – Risks don’t necessarily come as discrete events, so companies must be prepared for multiple events. The senior level management teams need to tackle these issues. Businesses know that cause and effect is all part of their everyday performance. Most concerns are interrelated such as demand falling off, create less need of supply, reducing revenue and hurting performance.

 
Tweet

The historical review and ideology of ERP (Part 2)

Authored by Junaid Khan

An Enterprise is a group of people with a common goal, having resources to achieve that goal; resources include money, manpower, material, machines, technologies, etc. Whereas planning is a necessary tool which hooks up all resources together. Enterprise Resource Planning (ERP) provide platform to integrate all the business processes of different departments and functions across a company onto a single computer system that can serve particular needs of the different departments. ERP combines all the business requirements of the company together into a single, integrated software program that runs off a single database so that various departments can share information and communicate with each other to accomplish the departmental / organizational objectives. The concept of ERP evolved during the last 40 years and today it is considered as an important requirement to align the operations of business with best practices of the industry as the modern techniques from Supply Chain, Accounting and Finance, Manufacturing and Operations segments have been incorporated in the available ERPs.

The historical review and ideology of ERP (Part 1)

Authored by Junaid Khan
Before industrial revolution, very few companies were doing business in a well-organized or systematized way. The companies used to have small operations and in most cases, a single person was managing all the operational strategies. The decisions were in the light of overall company objectives and available resources. By the time, manufacturing cycle of the companies increased, the management of entire operation became impossible for a single person and formation of departments with specific objectives contributing towards overall organizational goals was introduced.

Plan Better for Today & Tomorrow through Spend Analysis

Authored by Usama Shahid

The companies can greatly benefit from incorporating a smarter spend strategy into their organizational platform. By having credible spend information companies can make smarter purchasing decisions which will ultimately make them more successful. However, selecting the right spend analysis approach is not as simple as it may seems!

The primary purpose of deploying a spend analysis program is to help CPOs CFOs to transform there spend data into meaningful amount of  information to forecast and make better decisions for spend strategy.

The following tips are the key success factor that will help organizations to shape there spend analysis approach as well as drive purchasing success for there corporation.

Welcome to Public & Private Sector Thought Leadership Papers!

Authored by Azra Sultan

Today most of the procurement organizations overlook one of the most significant sources of savings. By taking a holistic view of procurement spend and considering the total cost of ownership, further, previously untapped savings can be realized. Gaining the greatest benefits require us to control our spending and manage our teams wisely – another great feature of best-in-class procurement organisations. Tejari is delighted to publish Thought Leadership Papers for Public & Private Sector to help you understand just how well developed your capabilities are and what you need to do to improve them. These white papers explain a number of approaches that executives and decision makers can take to build a collaborative eProcurement infrastructure and unlock cash from their business. Read these helpful white papers to learn more about procurement benchmarking and discover key factors that will help you determine your eProcurement readiness.

Ten Strategies for Best-in-Class Public Sector Procurement

To Bid or Not to Bid? 5 Best Practices for Asking RFP Questions

Please click on above mentioned links to download these reports

 Tweet