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Spend Management…
Bertrand Maltaverne – POOL4TOOL
Bertrand MaltaverneSince 2014 POOL4TOOL, Senior Business Consultant & Product Marketing2004 – 2014 Schneider Electric, Corporate, Various positions on eTools for Direct & Indirect Procurement2001 – 2004 Schneider Electric, France, Purchaser for Direct Materials1998 – 2001 Schneider Electric, Turkey, Technical Manager
About :
The only all-in-one platform for Direct Procurement:• Strategic Procurement: Category Mgmt., SRM, …• Operational Procurement: eSourcing, Supplier Perf., Quality and Issue Mgmt....• Supply Chain execution: Supplier Network / Portal, PO, ASN, VMI, ...
Public Spend Forum(A blog of the Spendmatters family of blog)
http://publicspendforum.net/
Spend Management…
Who is this person?
1983… In the Harvard Business Review:
https://hbr.org/1983/09/purchasing-must-become-supply-management
Dr. Peter Kraljič!
Since 1983, the world has changed…
4 x Growth in trade...
Globalization!Example: World’s top exporters, 1995-2014
New challenges, like sustainability:Number of newspaper articles containing the term Corporate Social Responsibility (CSR)
Technology!
The foundation of the Kraljic model, segmenting, remains valid…
Avoid the “1-size-fits-all”
• Different type of spend,• Different type of stakes,• Different type of suppliers,• …
… but it became more complex!
Complexity Technology (eTools) can help!
But, there are several “tools” to get results…• Strategic Sourcing Tools• SRM• eSourcing• eAuctions
• Transactional Tools• eProcurement• eTravel• P-cards
Source: https://www.pool4tool.com/cms/en/resources/whitepaper/procurementvalueengine
The challenge is to select the right tool for the right job!
• Effective: deliver value to the entire organization (whatever it means in your context)
• Efficient: use the right amount of “resources”
• Sustainable: long-term orientation, not just short-term
The Spend Management Equation:
Spend Management
Value
=
Governance & Category Mgt. Sourcing / Supply Mgt. Purchase-To-Pay
Effectiveness: deliver more value!
“Procurement has to be the voice of ‘commercial conscience’, remaining impartial in terms of articulating its view to the business so that people can make decisions with all of the facts at hand.”
Platforms!
Value-Based Sourcing: no more “should have”…
• TVO model includes non-price information per spend category (from expert sources)
• Automatically integrated into the analysis / scenario
• Enables the creation of +/- (bonus / penalty)
• Decision (= trade-offs) is taken with all cards in hands
Supplier’soffer
TCO/TVO &scoring
Supplier 1 …
Efficiency - What you “do” should not cost more than what you buy!
Macro eSourcing ProcessDemand / Request Strategy Bid Analysis Negotiation Awarding Contract
ERP
eProcurement
Project
Self (manual)
Soft Auctions
eAuctions
RFQ / Multi-round
Face-To-Face
Offer analysis & scenario
Internal approval / review workflow
Inforecord to ERP
Purchase Order
Catalog item
Contract
Auto. based on preferred suppliers / category
Manual
Lead Buyer / Commodity Manager review
Comparison & scenario
Linear Price Perf. & benchmarks
TCO / TVO analysis
Example process targeting automation…
“Express”: automated process
Use case: recurrent, low stakes purchases, supplier strategy is defined, key driver is price.ROI: process cost optimization and time-to-market
Example process driven by strategy…
Category/Commodity Management
Use case: High stakes purchases, closed-loop approach (strategy operations)ROI: value-centric and fact-based decisions, inclusive process, stakeholder management, savings realization
The next generation…
Next generation’s platform!Assistants:• Conversational• Intelligent• Pro-active
Based on latest technology:• Artificial intelligence• Machine learning• Natural language
processing
The future is now…Some use cases:
• Guided buying• Recommendation for actions (info overload, not
enough time…)• Recurrent tasks (reporting, search…)
Value:• Learn user / category / company specific preferences,
rules, policies…• Smooth hand-over to a human when reached its limit• No learning curve, no interface (speak / chat)• Interoperability (system-to-system and between
parties)
Conclusion…
Back to Dr. Peter Kraljič…
Source: forewords in “Leading Procurement Strategy: Driving Value Through the Supply Chain” - 2014
“It is over 30 years ago that I first ran into procurement as a source of strategic value and relevance for the company. Since then a lot has happened and I am now convinced more than ever that procurement is critical for enterprise performance enhancement.”
Procurement must have a Digital Transformation Strategy!
Thank you!
Bertrand MaltaverneSr. Business Consultant & Product [email protected]
Join the online conversations!
LinkedIn https://at.linkedin.com/in/bmaltaverneTwitter (news) https://twitter.com/@bmaltaverneMedium (blog) https://medium.com/@bmaltaverne
