Supplier Management

Last week, on Supply Excellence, we shared key findings from a Saugatuck-BusinessWeek study of more than 400 C-level executives pointing toward economic recovery in the coming year. The study, Shifting C-Level Business Priorities as the Recovery Take Hold,  found that top execs surveyed have traded in their recent cost-cutting myopia for a focus on increasing sales and revenues, penetrating new markets, and capturing market share.

Yet, businesses will take a more measured approach toward profitable growth. The study unveiled four key strategies and investments top execs (CEOs, CFOs, COOs, CIOs, CMOs) have planned for the coming year:

1. Target projects that can improve visibility into cash flow and improve working capital management. With credit still hard to come by, CEOs and CFOs are looking to “finance growth through internally generated cash flow” and alternative financing options rather than more traditional 3rd-party financing. Some examples of ways to improve cash flow in today’s tight credit environment: e-invoicing, discount management, and supply chain or receivables financing.
2. Focus on low-cost, high-impact mini-projects. This jibes with my own conversations with a CPO from the hospitality industry just last week who said, “we’re only looking at investments with quick payback; typically within months.” Some quick-hit suggestions include cutting supply chain costs through improved strategic sourcing and online bidding as well as revenue acceleration through improved contract management.
3. Consider variable or operational IT investments. The study found that more businesses are looking to shift more IT investments from a CAPEX to more variable, subscription models in order to speed projects and maintain more agility in the business. A CIO at a professional services firm indicated: “My internal customers want quick and measurable results, with long deployment or capital expenses…we’re getting more involved in SaaS and Cloud solutions.”
4. Be careful not to cut to the bone. A renewed focus on business agility means not only protecting against a double-dip recession but being able to ramp up quickly in advance of growing demand. Researchers advise not to cut too deep into staff or infrastructure. Union Pacific Railway is one company that learned this the hard way during the last recession. This go around, UP put many workers on a paid furlough, using the downturn to retrain and enhance skills — all so it could ramp up quickly when freight demand picked up. Other companies have augmented internal skills and expertise with those of external consultancies and solution providers who could help them achieve short-term goals and expand capacity without taking on fixed costs.

The Saugatuck-BusinessWeek study is a clear sign that businesses are confident we are entering a period of economic growth — albeit slow growth. It also signals that chief execs are taking more calculated approaches toward growth; thanks in large part to still-tight credit markets and uncertainty about Europe’s rebound. Focus in the near-term will remain on measured and profitable growth and a laser focus on cash flow and working capital management.

For more insights in the research findings, get a complimentary copy of the study here.

Related Post: Chief Executives Refocus on Growth; New Priorities

I wanted to thank those who responded to the 2011 Supplier Management Feature Survey.  The biggest surprise was how closely our internal voting matched our customer voting.   I have filtered the list to show the top 3 enhancements based upon the customer survey responses.  I would like to hear from the community about why you feel these should or should not be included.  Maybe some customer’s use case might influence others and push other issues to the top!   We haven't finished our 10s3 planning so there is still time to influence the release.

The top 3 features in no particular order:

• One-To-Many       
  
  • Purchasing Professionals may be measuring performance and/or risk for 10-50 suppliers.  They have to do this as a side job to their other activities and therefore don't have the necessary time to spend managing all the surveys, publishing of scorecards, etc.  Thus they want a single place to publish all the surveys for all the suppliers at one time.   As part of the overall problem the Purchasing Professionals need to be able to actively manage all the surveys which are sent out as well.  You need to know who responded to which surveys.  You wouldn't expect the purchasing professional to go to each survey individually and view the activity.
    
  • The same participant may be invited to all 50 surveys.  So the participant doesn't want to receive 50 email invites (they don't want to even receive 5 email invites).  They would like to receive a single invite to the survey(s) and respond to the surveys in a central location.  Today they do this in an Excel workbook where each column or sheet represents a different supplier.
    

• Integrate Supplier Profile with Spend Visibility   
  
  • Allow for ways to link Spend Visibility suppliers to your Sourcing, Contracts, or SIPM suppliers.  This will allow you to choose Spend Visibility suppliers to create contracts, measure performance, collect information,  or invite to your sourcing events.
    

• Supplier Fact Table
  
  • Send Supplier and Supplier Profile Questionnaire data to a new fact table.  This would allow companies to run reports such as "Which companies have I not invited to Sourcing events", "Show me all the rejected suppliers who were created internally by organization", and "Show me all the business contacts by supplier organization"
    

If you have an opinion on these features and want to influence their final prioritization, create a comment below and let us all know what you think!