How suppliers have changed Dutch management practices
To better understand the implications and opportunities of our latest research into the spending habits (and subsequent management practices around these habits) of modern day Dutch businesses, we have compared labor and non-labor (supplier) costs across the Dutch AEX25 over a two year period.
Even though the business environment today changes with unprecedented speed, perceptions of business continue to be rooted in tradition, more specifically - traditional hierarchy structures and the resultant management practices.
I am not the first to observe that 'procurement' has a branding and reputational problem. The word means different things to different people. I can think of several instances where, if I compare the service provided by 'procurement' in two separate businesses, you could be excused for thinking they are operating in totally different areas of business management.
So, after months of deliberation and consultation, the Competition Commission published its provisional decision on the remedies relating to the market for statutory audit services. But will this really achieve the CCs laudable objectives to improve quality and broaden the competitive market for statutory audit?
The Dutch economy is the fifth-largest economy in the euro-zone and is noted for its stable industrial relations, moderate unemployment and inflation, a sizable trade surplus, and an important role as a European transportation hub.
How corporate virtualization has changed the game for Dutch business
Businesses around the world have been on a journey, whether deliberate or not, of cost externalization. What was once a labor cost, is now a supplier invoice. Our latest research into the spend behaviors and patterns of the Dutch AEX25 has found that a significant portion of revenues are now being spent outside their respective organizations. A key and somewhat surprising finding from the research is the extent to which it has occurred.
The modern Dutch corporation has externalized its cost base. Our latest research seeks to understand the extent to which this has occurred across the Dutch AEX25, and explores the implications for Dutch business leaders. Below is a brief visual overview of the research (an infographic), highlighting some of the most arresting findings and important trends.
Audit tendering may not turn out as hoped without some market change
The FRC and Competition Commission are causing change in the audit market, and when combined with pressure from the corporate governance teams of the largest investors, there is now real impetus for change.
Procurement not following rules for success, time for a rethink
Every now and then a piece of fresh thinking comes out that upsets the apple cart. There's a great one in April's edition of Harvard Business Review. It references a study conducted by Deloitte, which identifies what the rules are followed by companies that are truly successful over a long period of time. The research reveals surprising results. And here is why...
Q2 wrap-up: The issue with supply management and a call for change
This round-up of sought after research, articles, discussions and interviews offers some insight into the challenges and concerns of senior executives looking to understand total cost management in their business - and the role that suppliers play.
The impact of ‘corporate virtualization’ on your supply chain
The FT recently ran a piece called "Businesses unaware of supply chain risk*" which followed on from the Bangladesh garment factory fire (killing over 600 people, spurring a fierce public reaction). And just this week, days after the FT article was published, news of a Cambodian shoe factory collapsing, killing at least two people, hit our headlines. These catastrophic events come just weeks after the horse-meat scandal and within memory of the Japanese earthquake disrupting car supply chains.
Faltering growth means proactive supplier engagement is required
Something has to change. Retailers face being subsumed by the economic conditions, drawing on increasingly limited funds for reinvestment back into their businesses. But sustained sector growth seems a small dot on the horizon. There will always be the trend-buckers and those that insulate themselves from the worst of the high street maelstrom, but for everyone else, it is time to think differently about how profits can be boosted from sources closer to home.
Managing cost to generate growth and unlock competitive advantage
Today, businesses are exposed to dynamically changing market conditions, regulatory pressures and increasingly intense competition (particularly from international markets). And since 2008, companies have focused heavily on headcount reductions and slashing budgets to improve balance sheets. But once these traditional means of cost reduction had been exhausted, there was, among some senior management, an attitudinal change to the concept of cost management.
How to avoid value-erosion and cost-leakage in Financial Services
Cost management and 'cost-out' is critical for any business. As such, cost as a metric will always be near the top of the agenda for any business assessing the performance of their procurement or sourcing function. However, driving costs out of a business is not a one-off project - it's a continuous, evolving process.
It's not my fault. It wasnt me. Sound familiar? These are common excuses weve used since childhood. And while they may pass in many circumstances of private life, they dont often fly in the corporate world. Pointing the finger usually doesnt protect shareholder value nor avert corporate reputational damage.
With so much activity going on outside the direct control of an organization, it is in hindsight no surprise that there has been a reduction in the level of transparency of spending behaviors, and an increase in potential risks (both reputational and financial).
Ladbrokes Chief Procurement Officer bets on stakeholder management
Supplier relationships are obviously vital to a sound procurement strategy. But for Clive Rees, Chief Procurement Officer at betting giant Ladbrokes, keeping internal stakeholders close is just as important.
Banks seek agility, transparency and transformation from procurement
Procurement adds value by offering transparency into where and how a business spends it's money. But when it offers "an understanding of what is driving a particular spend pattern where the demand is coming from and how can it be managed effectively," it can really start to deliver both strategic and tactical benefits.
March is budget month in the UK for the Government. And, unusually, it also is in the US. It is also usually the pivotal point in the year - as it becomes clearer whether the budget is going to be met or if it is time for remedial action. This March is shaping up to be no exception.
There are some strict rules about the scope and execution of statutory audit. Things undoubtedly got tougher for the profession in the wake of the Enron scandal that brought down its auditor, Andersen. But interestingly, while there are now stricter rules around auditor independence from management and limits on non-audit services an auditor can provide, many of the issues that scarred audit then still linger.
The world of audit is in a state of flux. For a start, the long-standing grumbles about the Big Four (Deloitte, E&Y, KPMG and PwC) dominance in the world of corporate auditing has resulted in debates about regulatory reform domestically and in Europe. Even the Competition Commission is getting in on the act.
"If you always do what you always did, you will always get what you always got" - Albert Einstein. Time and time again organizations launch into programs with the aim of reducing costs from the supplier base. It's a perfectly rational thing to do. Who wouldn't want to get the cost base in a fitter state?
The world is full of buzz words: big data, cloud computing, phablets, wantrepreneur. Some have substance sitting behind them and go on to become mainstream (phablets are coming - mark my words!). Others are created not to describe an innovation, but to describe a new concept that is hard to articulate (just try asking someone to articulate what cloud computing is. It's fun listening to them attempt it).
January, traditionally long and cumbersome, seems to have raced by this year and to exhibit classic stagnation characteristics. The best evidence of stagnation is conflicting economic indicators. If the economy is flat, this is not actually because nothing changes. The average is a net of things improving and things deteriorating, which in this instance are cancelling each other out.
"Culture eats strategy for breakfast." That's an old saying attributed to management guru Peter Drucker, and it's been particularly pertinent over the past five years. A more modern meme is the "new normal", but I think they're closely connected. And a good illustration of how and why is the news coming out of Barclays.
Within a short span of days late last month, we learned that in the final quarter of 2012, the US economy contracted for the first time in three and a half years - the nations gross domestic product shrinking by .01 percent.
Sector spotlight: Energy (p2) - the opportunity for energy providers
With consumers becoming increasingly sceptical of their energy providers, more mobilised by the value for money they achieve on their household costs and more able to take their business elsewhere, energy companies must do what they can to ensure that their business is match fit.
There are nearly 4,000,000 economic statistics produced in the US every year, according to Nate Silver in his excellent book The Signal and the Noise. Choosing the ones which give the most accurate or best insight is always a challenge.
Regulatory forces are the most obvious driver of change in financial services. There is no doubt that the Mortgage Market Review, Basel III, the Independent Commission on Banking, the Retail Distribution Review and other regulatory factors have added substantial cost and complexity to running bank operations.
Fiscal cliff, growth in EU, executive pay – welcome to 2013
Happy New Year! We at Proxima hope that 2013 has begun productively and happily. There has certainly been no time to ease into the year gently - 2013 definitely has picked up seamlessly from where 2012 left off which, in our eyes, means continued opportunities and increased potential for enhancing value for our clients.
The financial services sector might have thought the worst was over by the start of 2012. Blamed for the global economic meltdown that was entering its fifth year, and made pariah in the court of public opinion, bankers in particular must have been hoping the worst was over.
Following on from a previous post on this topic, the Shareholder Spring should turn its attention away from executive pay, and towards an area that has a far greater opportunity to improve profitability and shareholder returns - third party costs.
Global myths of procurement outsourcing: Series summary
This is a round-up of all the posts in our global myths of procurement outsourcing series. I'd like to thank everyone who contributed comments and offered insight towards dispelling some of the common myths that circulate around procurement outsourcing. Hopefully we have gone some way to help achieving that.
We recently hosted a webinar - discussing the findings of our latest research - The £10 billion profit opportunity - and their implications on business today. This post recaps the discussion and poses some thought prompters for what looks to be another turbulent 12 months ahead.
Global myths of procurement outsourcing: Myth 4 - PO results in a loss of control and increased risk
This is often cited as a reason why people are reluctant to even consider procurement outsourcing. Yet it's an unfounded fear. As any CFO that has outsourced will tell you: control goes up. Risk comes down.
The changing nature of business (pt 9): Creating a cost-conscious culture
While 88% of finance leaders believe that their focus on total cost savings has increased, according to recent research, 71% of them are continuing to see indirect costs growing and labor costs shrinking. And yet headcount reductions remain a top priority for cost reductions
Global myths of procurement outsourcing: Myth 3 - PO damages stakeholder relationships
Successful procurement outsourcing hinges on a provider's ability to successfully engage with stakeholders. You can have the world's best sourcing engine, but it's nothing if it doesnt engage well with the business, and deliver what the business needs.
Cost management: lessons from the Sales department
Having spent some time at ProcureCon, it is good to be reminded that many organizations have got over the initial challenge of getting good spend data. Quite a number of CPOs referred to having got to grips with this early in their tenure. However, I think that this is only the start of the journey - not the destination.
This month's roundup of news and views from around the world was significantly dominated by business, political and natural happenings within North America. However, recent research within the UK might aid in clearing some of the fog that lies ahead for large corporates going into 2013.
The changing nature of business (pt 8): The rise of the shareholder
In 2011, JP Morgan published a report showing that shareholder activism in companies worth more than $1.6 billion / £1 billion increased by 90% in the first three quarters of the year. Without meaningful change in performance expected in the immediate future, executive remuneration in particular is likely to remain a highly contentious issue.