On March 28th we had dinner with 20 purchasing managers in the majestic Maurick Castle in Vught. The authentic building dates from ± 1400 and was not supplied with electricity until 1914, something that is fundamental in our society of mobile devices and the Internet of Things after more than 100 years. Would the same apply to Artificial Intelligence (AI) in 100 years?
Strategic Category Management as a tool or methodology was introduced years ago in Retail and B2C-markets, as a mean to generate more efficiency for a product or in a product group. In Category Management in Retail- and B2C markets, the specialisms purchasing, sales, marketing, store formulas and logistics work together to create ‘winners’ on the store shelves.
The term ‘Category manager’ instead of ‘Purchaser’ for a product or product group is also emerging in the B2B-markets, with the aim to indicate that a purchaser specializes in a product or product group to contribute to the full extend to company- and procurement goals. The difference with the B2C-markt, however, is that the B2B-category manager will interfere less / not with marketing and sales, because this person usually does not purchase finished products.
When defining a project, the choice will be made to steer at low costs or at shortest lead time, while the scope variables and the level of quality remain the same. In the current economic state, time to market is often seen as the most important driver and thus a project will be time-driven. As a result, a project will not be executed at the lowest costs.
Costs and lead time cannot be seen separately: a longer lead time affects costs negatively through ongoing team costs, construction site costs etc. A shorter lead time ensures that less time will be invested in the design and less time will be spent in the purchasing process to investigate suppliers and negotiate prices and conditions. As a result, specifications will be less detailed and thus costs and risks will increase in the project.
In this article, we will argue from the theory of Williamson that also in a time-driven project sufficient time must be taken to define a good scope and sufficient time must be taken to agree right prices and conditions with suppliers, so that the goals of the project can be achieved.
New technologies like Artificial Intelligence and Blockchain are expected to have a major impact on the procurement function in the near future. At the same time, we still have to deal with lingering problems in our purchasing department, such as a shortage of time and resources and the lack of standardisation in processes. What does this mean for the future of the procurement profession? What will the next 5 years look like?
This blog answers these questions and uses information from the Zycus Pulse of Procurement research 2018. More than 400 procurement professionals worldwide took part in this survey.
Being the Gold sponsor of the first Zycus-event in Europe, Qando had the privilege of contributing actively to the success of this 3 day-congress. In particular, we hosted our own break-out session which was very well received: Don’t Just buy and implement Procurement Software. Get it Adopted!
IT-vendors often have a strong dominant position in their relationship with organisations and switching between IT-service providers involves high switching costs such as changing interfaces, reorganising processes, training people, and accelerated depreciation. In addition to direct costs, there is a risk of switching between service providers since a loss of production, sales and data may occur in case of failure. Therefore, these service providers can be seen as strategic providers which can have a high impact on the risks and costs of organisations (Kraljic, 1983). Kraljic indicates that a partnership may be the most appropriate strategy to mitigate these risks.
Implementations and the future of procurement
The third day started with sharing experiences during and after the implementation of Zycus, told by Paul Stasko of Curtiss-Wright. They started with rolling out Zycus iAnalyze and realised significant cost savings for Non Product Related (NPR) spend in particular. Subsequently, they started with implementing other Zycus-modules.
Last week three employees of Qando attended Horizon, the largest event of our software-partner Zycus. From all over the world (potential) clients, analysts, experts and partners gathered together at this 3-day procurement congress at the Roosevelt Waldorf Astoria Hotel in New Orleans. A great group of approximately 200 people. Theme of this year: Beyond savings, beyond value.
Continuing improvement is something that every procurement organization strives for. The question is how do you realize this? How can you ensure clear goals that are carried out among employees? What appointments do you arrange and in which manner do you discuss them within the team? Which steps do you have to take during the year to achieve the goals? This article describes how to provide continuous improvement through procurement performance management in five steps.