For some time, we have been talking about the opportunities for procurement and supply chain specialists to assume larger, more significant roles within their organizations. These opportunities have emerged as the supply chain has become more complex and companies grow more reliant on suppliers to fulfil their respective business promises.
Is Microsoft its suppliers’ benevolent benefactor or dictator?
Last week, the technology giant Microsoft took a progressive stance with its supplier base, taking steps to ensure that the suppliers with whom it conducts business give their employees at least 15 days of paid leave each year. Sure there’s the questionable policy of corporate dictation (especially in the case of Microsoft, with its Samson and Goliath overtones). And, there’s the inevitable fine print: “this new benefits minimum will apply to suppliers with 50 or more employees in the United States. It will apply to their U.S. employees who have worked for them for more than nine months (1500 hours) and who perform substantial work for Microsoft.”
Many of you may already be in the midst of planning your procurement function for the year ahead, and deciding how your team will be shaped in 2016. What will they achieve? What challenges will they face? And what will be expected of them?
At Proxima, an essential part of our work is making sure our finger is on the pulse of opinion and sentiment in our clients’ markets. It means that our advice and strategic development work is contextualised correctly within the environments in which our clients operate, which in turn enables us to find the best solutions to their challenges.
One world, one business model – the impact of globalization
We were chatting to a management thinker the other day – a former CFO, as it happens – and he said something so compelling, yet so simple, that we were stunned. “The problem with the runaway success of MBA schools is that we’re developing a global corporate monoculture,” he said. “We’re concentrating risk in similar places around the world.”
Corporate virtualization - 100 years in the making
2013 marks 100 years since Henry Ford was faced with the dilemma of producing his latest invention, the Model T Ford, on a large scale - in an efficient, low cost way. His answer was to invent the first mass production assembly line. In doing so, Henry Ford revolutionized the world of manufacturing. Over the past 100 years, following this monumental milestone, business has changed beyond recognition.
The changing nature of business (pt 5): Introducing the Profit Enhancement Index
We've already seen how non-labor costs are 4.8 times higher than labor costs. But our analysis of FTSE 350 data also reveals the potential enhancement to profitability that can be brought about by proportionally lower reductions to the non-labor cost base.
The changing nature of business (pt 4): Sources of profitability
Our research shows that in the FTSE-350, labour consumed on average 12.9% of revenue in 2011. In contrast, non-labour costs consumed 68.3% of revenue. The difference between these two percentages suggests that bringing non-labour and third-party costs under greater control represents an opportunity for leaders to make more meaningful improvements to their profits than the traditional focus on labour cost.
I've had numerous conversations with CPOs in my time who have said they are very proud of achieving a 10x, 20x, or even 30x ROI on their team cost. And research has claimed that world class procurement functions achieve a ROI twice as high as the average. But both of these measures are not only far too simplistic, they are misleading and are forcing the wrong behaviors in our business leaders. And here's why...
My past 2 posts in the Redefining Procurement Series were focused around the need for procurement to develop high levels of Stakeholder Communication Skills. However, the fact of the matter is there is a shortage of people with the right skills and experience to successfully communicate with the wide variety of stakeholders that exist within any business. Given your average category manager's role is to go out into the market and get the best value for money, there is no wonder the internal communications element has fallen by the wayside.