Spend Matters welcomes a guest post from Eric Narsolis of Alvarez & Marsal.

Reduced deal volume in recent years has left several private equity funds with significant overhang in their portfolios. In a recent survey, Alvarez & Marsal (A&M) found that an increasing majority of private equity firms are successfully implementing cross-portfolio leveraged sourcing programs to drive savings and EBIDTA improvements across a number of categories.

A&M's Sourcing team asked principals and managing directors from funds ranging in size from less than $500 million to more than $10 billion about their use of leverage sourcing programs. Contrary to common misconceptions about the difficulty of implementing sourcing, the survey results highlighted three critical success factors:

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Spend Matters welcomes a guest post from Jim Pfeiffer, a Senior Director with Alvarez & Marsal Business Consulting. Jim specializes in operational performance improvement and supply chain management.

Regardless of perceptions about "green" initiatives, there may be a different "green" to be had...the kind that generates financial returns. The collapse in natural gas prices coupled with rising petroleum prices have given rise to an opportunity for fleet owners to benefit from converting to clean-burning natural gas.

There are two clearly divergent vectors in play in the world of energy today. Prices of crude-oil-derived products like gasoline, diesel, and jet fuel are elevated and rising globally while domestic natural gas prices have collapsed due to the boom in gas production from the so-called "shale gas" plays. This has created an unprecedented disconnect in the relative value of natural gas vs. petroleum fuels on an energy-equivalent basis. While the natural gas story is a pleasant surprise for commodity purchasers, the situation in petroleum is far darker.

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Spend Matters welcomes a post from Cyndi Joiner, Managing Director of Alvarez & Marsal Business Consulting.

A study of 200 American law firms revealed that 64% of respondents believe that the legal landscape went through a fundamental shift during the recent recession ¹. The two most notable changes were a decline in hourly billing rate growth and the increasing use of alternative billing structures ². Approximately 85% of clients requested discounts. Companies that spent up to $500,000 with a particular firm paid a blended average rate (all positions) of $255/hour while those that spent $5-10 million who failed to leverage their spend paid nearly twice as much, at $477/hour. All summed up: The legal community is validating for us that Legal is a category that should be "in bounds" vs. "out of bounds" for sourcing organizations. An alternative approach for managing and leveraging enterprise-wide spend is within your reach.

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Spend Matters welcomes a guest post from Bill Stotzer, Senior Director at Alvarez & Marsal.

Containerboard prices in the United States have remained relatively unchanged since April 2010, which, according to RISI, represents one of the longest periods of price stability in this market since 1970. Most analysts in the paper industry expect a continuation of stable prices early in 2012. Downward pressure will likely occur in the first quarter due to weakening export demand in the US, which will drive an overall decline in recycled containerboard prices. In addition, as the spread between published price/ton and transacted price/ton approaches $100, the pressure for an industry-wide price decrease will increase in 2012. These trends are not likely to be offset by any significant increases in domestic demand during 2012, which would counteract the downward pricing pressure.

So, in a flat to declining containerboard market, how does a company actively manage and significantly decrease corrugated packaging costs? We believe there are three key activities a company should undertake to actively manage cost reduction in this area, and take advantage of over 1,800 corrugated packaging manufacturing facilities in the United States.

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Please click here for the first post in this series.

My discussion with A&M's Steve Gold next turned to an area closer to procurement -- base and raw material sourcing. Steve suggested that as he looks across many of the industrial companies A&M surveys, "generally most organizations are unprepared on the hedging or demand aggregation front." Yet some companies are doing some pretty fascinating things, which may be signs of trends to come in 2012. In one instance, two very large food/CPG companies are currently co-mingling and aggregating spend for truckload procurement in North America. Together, these companies represent a large enough spend and overlapping transportation lanes that their volume has a material impact on carrier pricing.

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I recently had a chat with Alvarez & Marsal's Steve Gold to get his thoughts on supply chain predictions for 2012. Steve is one of the leaders of A&M's supply chain practice and the former Chief Supply Chain Officer of PepsiCo. Even though I thought the discussion would trend toward supply chain operations issues given his background, the themes and predictions actually dovetail quite well with broader procurement scenarios over the same time frame -- perhaps proof of the continued integration and collaboration between functions.

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Spend Matters welcomes a guest post from Hani Alexander, Managing Director at Alvarez & Marsal.

In the years since the economic downturn, most companies have pursued quick and easy procurement cost reductions. However, we see many of our clients continue to leave money on the table because transformational change is challenging and imposing. Most organizations know they can reduce costs further, but take shortcuts to implement quick fixes that have little long-term impact. Nevertheless, companies can develop a culture of continuous cost optimization by utilizing a focused organization to plan, execute, and sustain advanced cost-reduction practices.

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