The boom of technology implementation and its effectiveness were quickly tested by the challenges of the pandemic. While some challenges were solved successfully – collaboration via video conferences – the pandemic has stressed the structure and effectiveness of other areas.
With the impacts of COVID-19 still being felt around the world, it’s hard to look ahead at what might be coming next. But you should.
The COVID-19 pandemic brought a truly unprecedented level of disruption to global supply chains, bringing entire industries to a complete halt. It was unlike any supply chain crisis we’ve seen in modern times, but it was far from an isolated incident.
According to McKinsey, global indirect procurement spend has been growing by an estimated 7% each year since 2011. Many of the inflationary factors driving this rise are well outside of most organizations’ control – so what can today’s procurement teams do to keep these essential costs under control?
At U.S. insurance companies, policyholders’ claims represent 70% to 75% of the total cost. This makes complete sense, of course, since policyholder benefits are the sole reason why anyone buys insurance products and services.
The problem is, at insurance companies, procurement is limited to supporting indirect spend — real estate, marketing, finance, etc. — which accounts for less than 10% of the organization’s total costs and severely limits our ability to provide substantive value.
It is amazing the differences there are culturally to the concepts of eAuctions and their widespread adoption. In Europe, eAuctions have been adopted by most organizations and are considered an integral part of the strategic sourcing process. But in North America there remains quite a bit of skepticism and doubt about not only adopting the practice, but which categories are the best candidates to benefit from this strategy.
There’s not likely to be a lot of business travel happening within most of your companies right now. There hasn’t been, globally, for a few months, as corporations introduced blanket travel restrictions from March onwards for all but business-critical or key worker travel.
Before getting into the topic, write down two things:
1) Your high-level definition of the term spend under management
2) What percentage of your company/organization’s spend would you estimate is under management?
Once you answer those questions, read on…
Compliance is a critical purchasing success factor. Aside from the tremendous amount of financial impact, compliance has other positive outcomes. When employees comply with purchasing through designated supplier programs, it significantly streamlines the supply chain, allowing your organization to be agile and flexible.
Can you outline why your team embarked on this project and the problem that needed to be solved?
When companies start to consider adding strategic sourcing to their regular business processes, they often overlook a number of critical considerations. Chief among these are the benefits of a third-party support and – even more crucially – the process of aligning procurement with this new methodology.