SDI Corporate Blog

Sustainable Results

Black Friday, Cyber Monday and… Procurement???

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Black Friday and Cyber Monday may have come and gone but the shopping mission, or procurement, as most business organizations would say, continues. If you are conducting your own holiday shopping (as opposed to having a generous family member or loved one volunteer to do so on your behalf) or even if you like to shop there are, admittedly,  a few general guidelines to abide by.  Quality, price and performance, to name a few. In the business world that might be analogous to sourcing from the highest quality price performing supplier… as well as the administrative chore of managing your suppliers and credit cards.

So, at this time of year we couldn’t help but compare the best practices of consumer shopping, which typically aggregates at the end of the year for various global holidays, with that of a business entity. During 2013, the average American planned to spend  ~$700 on holiday shopping – and many shopped carefully, But can you imagine a company that spends millions  –or even billions– of dollars a year on indirect spend for their company? Who is managing that?  Who is ensuring the supplier delivered the goods on time and at the right cost? Who is paying the bill and tracking the spend?

This leads us to the brief comparison.

Consumer Reports, the consumer magazine that compares and reviews a huge array of consumer products and services on a monthly basis, published a comprehensive and useful list of recommendations for seasonal shoppers. Many of these suggestions can easily be applied year round. For starters, they recommend, how about setting a budget. Or joining brand loyalty programs to secure added benefits. Avoiding bait-and-switch tactics is mentioned as well.

Sound vaguely similar to your procurement organization’s policies?  Let’s take a look.  According to Melanie Hawkett of Source & Effect, who recently published The Top Ten Procurement Tips, there seem to be several parallels.

Her top tip is to understand and review your spend regularly (budget), followed closely by ensuring you maintain a relationship –and contracts- with your top suppliers (loyalty). Last, but hardly least, is ensuring “you are choosing your suppliers on an ‘apples for apples’ basis.”

Let’s not forget about the back-end processes as well. Our post-shopping spree leaves most of us with multiple credit card bills in need of payment or debit card reconciliation. Undoubtedly, your in-home financial genius undertakes that assignment. Similarly, someone in your enterprise is hopefully ensuring the correct goods or services have been received and matching purchase orders to vendor invoices.  The list goes on.

By why the comparison?

The reason here could simply be: if you shop and manage spend well, then, by all means, do it yourself.  If spend management and the associated administrivia is neither your nor your organization’s strong suit, it just might be time to outsource that particular task. Happy shopping!

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