Supply Excellence — Spend Management “Stimulus” Resources

Spend Management “Stimulus” Resources

December 2nd, 2008 · by Justin Fogarty · No Comments · best practices, sourcing, spend analysis, supplier management, supply management, supply risk

In a recent interview with WallSt TV, our company’s President quoted a stat that really puts the impact of the recession on corporate profits and the opportunity that situation provides for procurement organizations in perspective. Kevin Costello said it takes a “20% increase in sales to create the same profits as a 5% decrease in the cost of goods sold.” If that doesn’t scream out for procurement organizations to take the lead in helping their company survive (thrive?) during the current recession, I don’t know what does. After all, how many companies can possibly expect to increase sales in the current environment? But at a time of dropping prices and demand, it’s certainly possible to cut costs.

With that theme in mind, we assembled a “Spend Management Stimulus Package” site to put information, tools and step-by-step instructions for creating an internal corporate “bailout package” in one central place.

What strategies are recommended for companies looking to spend management initiatives for cost cutting results?

Target Non-Traditional Spend Categories. As we’ve discussed here very often, indirect spend provides major opportunities for cost savings. So the resources in this section of the site are largely geared towards identifying indirect spend categories, including a white paper on T&E spend specifically. But perhaps the most interesting tool is the Sourcing Savings Calculator, which compares your actual spend with benchmarks for your industry. Savvy users can also tweak the model’s assumptions to better reflect their company’s historical or anticipated results. Obviously modeling potential returns for increased spend management efforts can help to make the case to executives and internal stakeholders.
Squelch the Mavericks. With a focus on spend analysis, technology, and change management, companies can reign in maverick spend. So the white papers in this section, including an excellent Aberdeen report titled eProcurement Beyond the Hype, walk you through how to construct a spend management program that keeps everyone working within an efficient, defined process.
Manage Your Cash. In the current market, cash is king. If there are better ways to hang onto your cash without harming your suppliers’ viability, it’s certainly worthy of consideration. SupplyExcellence’s own Drew Hofler’s 2 webinars - Unleashing Cash from AP and another on Working Capital Optimization - as well as a white paper on strategies for high yield working capital lay out some finance options that may help both buyers and suppliers retain some liquidity in the tough climate and keep you from putting your supply chain at risk.
Work with Your Suppliers. Having open lines of communication, a spirit of ongoing collaboration and an understanding of cost drivers for your suppliers can help both of you survive the recession. And the webinar by Supply Chain Management Review can help you understand what it takes to efficiently apply those principles across your global supply chain through a SPM program.
Seek Help (if you need it). Help is available if you need assistance with strategy or execution. The important thing is to recognize resource or expertise limitations early, since it’s always easier, faster and cheaper to do something right the first time.

Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.

Email Forward & Bookmarks