What is the best CPO tool or strategy in 2012?

Our field of 32 determines this year’s champion

Yes folks, it’s March Madness, Chief Procurement Officer Style, where the different procurement tools and strategies compete to get to the CPO’s Final Four.

Day Five of our Tournament brings us to Austin. In a move that some are calling “bold,” we’re going to simulcast the entire first round in Region Three, right here, right now. So, don’t phone the neighbors (unless they work in procurement) and don’t wake the kids (unless they’re top students aka future procurement pro material) or you may miss all the action.

Bright critics and fans alike will notice a sourcing heavy lineup in this bracket. Tournament organizers admit on oversight in the advanced “CPO Bracketology” algorithm {trade secret: the algorithm was the Excel Function =Rand()} and promise better results in future tournaments.

Game On!

(3) Implemented Savings vs. (6) Supplier Quality/Innovation Initiatives

Make some noise! Innovation is in the house! Innovation is definitely in the house tonight and it will be for the rest of this year and the rest of this decade. TED Talks on Innovation are a dime a dozen (here’s a dime ten, not a dozen examples) so the topic is hot. The issue, however is that while innovation is (a priority) in “our house” (aka. the buyer’s house), innovation is not necessarily in “their house” (aka. the supplier’s house) and if it is in their house, the buyer’s have probably been more likely to find it than to have helped create it. Supplier Collaboration (three seed in region one)? your time has come. Supplier Quality/Innovation Initiatives (“SQII”), your time is coming…. just not today.

And then there’s savings. And not, identified savings, which can include “pie in the sky” estimates. And not budgeted savings either. Implemented Savings where the sourcing hits the road. The savings number that means the most to procurement or should in our view. While we worry that savings tends to dominate too many procurement performance evaluations, it remains a key component of the procurement mandate.

TED still has not included a procurement-themed presentation, but focusing on Implemented Savings is clearly “an idea worth spreading” among CPOs. Implemented Savings wins!

(1) Strategic Sourcing vs. (8) Recruiting

700 million-bo-jillion Chief Procurement Officers feel that staff talent is a major departmental constraint. How many of them have begun to cultivate relationships with local universities (professors and career services departments)? How many of them have recruited local interns to spend a summer or a semester working in procurement? How many of them visit local universities to speak to students about beginning a career in procurement. How many of them are active in Recruiting??????? Answer to all of these Recruiting questions: not enough.

“The words of my demise are greatly exaggerated.”

~ Strategic Sourcing 2012

Strategic Sourcing is not dead. If you think it is, that’s because you’re probably doing it wrong or doing it the same way you did 10 years ago. Now, put down your palm pilots and excel-based sourcing templates (that claim to be collaborative optimization tools) and pay close attention.

Strategic Sourcing has changed. Strategic Sourcing in 2012 uses technology.

Manual-based processes, no matter the number of lucky steps that they may include, just aren’t strategic. They are hugely inefficient processes designed by billable consultants to maximize billable revenue. Sourcing teams don’t fall into the trap.

I guess that means, a correction is in order. As it turns out, Manual Strategic Sourcing is Dead. Long live Strategic eSourcing! Strat Sourcing wins a blow-out!

(4) Procurement BPO vs. (5) ePayables (P2P Linkage)

There have been times (not many) when CPO Rising has focused too intently on ePayables; ok, we have a fix for that. But, here’s the reality – P2P means Procure-to-Pay which means something that includes Accounts Payable (“AP”). The only way a CPO should tackle AP is when technology (i.e. ePayables) is in the mix. Here’s another reality – Procurement BPO can make great sense in certain situations. There are Chief Procurement Officers who have gone the full Procurement BPO route. Some of the companies have benefited. Of note, most of the CPOs are no longer there. Managing an outsourced relationship requires a different (usually cheaper) skill set than running a large procurement operation. That makes it all but impossible for Procurement BPO to earn a place in the “CPO Sweet Sixteen.”

Also, in case you forgot, P2P linkage is an easy inter-departmental win. ePayables, coached by Vishal Patel, wins.

(2) Spend Visibility for Sourcing vs. (7) Advanced Sourcing

What were they thinking? How can these two tools meet right here, right now.

Spend Visibility for Sourcing is so valuable (although, there are times that you can cheat); while Advanced Sourcing is a long-time favorite.

I hate that these two are meeting right here, right now. So here’s how our logic dictates the outcome.

Advanced Sourcing tools are a powerful set of automated negotiation capabilities included within quality enterprise-level eSourcing tools (within the ones we recommend, anyway). They help maximize results from sourcing and the overall benefits/value from their usage can be game changing.

BUT

Without Spend Vis. for Sourcing, the teams may not be focused on the best opportunities in the first place. You can go places without Spend Vis., but you can only go so far.

Spend Vis for Sourcing wins in triple overtime.

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