In the first post in this series, we explored, courtesy of an article by Emptoris' Craig Doud in Business Finance, how procurement and finance organizations are beginning to work together outside of P2P enablement and management. One area Craig touches on is one we've been writing about for some time -- the importance of having finance and procurement work together in supplier risk management, ideally moving from "risk reaction to risk avoidance," as Craig suggests. In recent years, we've observed a number of organizations sponsoring a new supply risk function that is staffed with a procurement leader (or two) but that reports into the finance organization. Craig has some useful technology use cases in developing proactive insight into supply risk.

[More]

Any time we hear about procurement and finance collaboration, the topic somehow involves purchase-to-pay (P2P) technology. Granted, budgeting, planning and savings implementation are also common joint procurement/finance collaboration memes that crop up, but in general, the most frequent intersection points that touch both organizations somehow involve demand management, transactional buying, payment approvals, working capital management, discounting/early payment, etc. Yet there are far more potential touch points between the functions. And in a recent Business Finance byline by Emptoris' Craig Doud, we begin to get to the bottom of what some of these additional points of non-P2P collaboration should be.

[More]

Please click here for Part 1, Part 2 and Part 3 of this series.

In our final installment of this series, we'll close with our final five predictions looking at how a falling euro may impact sourcing strategies, focusing primarily on the increasing linkages between IT, procurement and treasury strategies. The early posts in this series have been well received, so we're likely going to flesh out the thinking a bit more and combine these four separate posts into a paper for access in downloadable format. Be sure to check back in the coming weeks if you'd like to see some additional thinking on the topic. Continuing on with today's installment:

[More]

I recently posted another Friday Rant that suggested we should truly consider blowing up the A/P function and starting from scratch. The piece engendered a bit of controversy, although I must admit, I was hoping for more debate. The good news in this regard is that Pete Loughlin finally took the bait, penning a response and rebuttal of A/Ps rule in most companies. In the post in question, Peter notes that he feels a need to "defend AP" because "much of the criticism is unfair, and especially when it comes from purchasing." Peter qualitatively frames his argument and then backs it up with some interesting data.

[More]

Click here for the first post in this series.

I don't discount the notion of focusing on supply risk management as a top business priority. I think we must. Yet at Spend Matters, we've observed that roughly 80% of companies that embark on supply risk management initiatives begin with looking at monitoring and forecasting supplier financial health -- rather than broader supplier management risk considerations (such as performance risk, labor risk, brand risk, geographic risk). And in many cases today, where companies are dedicating resources to the financial side of supplier risk, we see the ownership of this risk element often resting with finance organizations.

[More]

Spend Matters would like to welcome a guest post from Vantage Partners.

Whether you procure services from the Big Four, middle tier firms, or smaller local firms, there are some common strategies that will help sourcing and procurement teams to maximize the value they get when buying services from accounting firms.

This piece does not focus on pure, cost-driven commodity buys, where you don't care who is providing the service or what levels of expertise they have, and the scope and deliverables are very clear and pre-determined. In that case, procurement professionals have all the tools they need to run RFPs, set up competitive auctions amongst competing suppliers, push on price, and contract effectively. That is your bread and butter, and we don't have too much useful advice for any professional skilled in that mode. BUT -- beware of assuming that all of what you seek from accounting firms ought to be in that mode.

[More]

In many companies that are large enough to have separate procurement and supply chain functions -- a good hint is when you begin to see titles such as "buyer" and "materials manager" with less frequency -- there's often a fundamental tension and even distrust between both parties. Procurement-minded leaders have a hard time understanding the obsession over planning, scheduling, forecasting and inventory levels at the expense of such areas as general cost reduction, strategic sourcing, commodity management and indirect/services spend reduction and oversight. And supply chain and manufacturing types tend to look with disdain at any promise procurement makes to reduce costs around direct materials. Interestingly, as a side note, "direct materials" is a phrase sourcing people like to talk about, but you rarely hear it from supply chain types, perhaps because what is indirect or non-core to them should simply never be a priority for the business. Materials are materials, thank you very much.

[More]

In the first three posts in the series (Part 1, Part 2 and Part 3), we looked at different models and approaches for sourcing and managing complex finance (including legal) categories. Courtesy of ICG Commerce, the discussion, in the most recent post in this series, also looked at a case study examining the types of results that companies can achieve through sourcing what's arguably the most sacred sourcing services cow of all: external audit services. But in this final post in the series, we'll leave the realm that involves sourcing firm-based services for a minute and instead examine another finance services case study: T&E and p-card programs. Even though many companies look at p-cards without realizing the type of price compression possible (based on revenue in fact -- incentive payments), the results speak for themselves.

[More]

Please click here for Part 1 and Part 2 of this series.

In this next post examining some pragmatic insights from ICG Commerce (and others) in the legal and finance sourcing and category management areas, we'll turn our attention to a case study to bring the savings potential of services procurement alive. In looking at areas that fall under the purview of finance, no single category of spend is more sacred than external audit, which we previously mentioned has an existing supplier tenure of over twenty-five years (that's right, by the averages, the last time your company switched its auditor was towards the tail-end of Reagan's first term of President of the United States). Clearly, if a company is to successfully pursue the sourcing of audit services, it's critical to gain broad buy-in and support from the CFO and controller, not to mention other key executives.

[More]