HfS Research: constant focus on savings counter-productive for success
CHICAGO, IL - December 9, 2013 - A new research report released last week from global business analyst firm HfS Research endorses findings from a recent Proxima report into the trend of Corporate Virtualization, affirming that organizations continue to direct more spend outside the organization, relying on external suppliers instead of investing in labor.
Top 5 tips for managing your virtualized/extended enterprise
‘Corporate virtualization’ has taken hold across all large businesses today - the on-going phenomenon of replacing internal functions and labor with suppliers has changed the very fabric of the modern company. It has not been a planned or even conscious decision – but over the last 20 years is has been an unstoppable force.
Why are businesses failing to get the most out of their non-core costs? (pt 3)
Part one and Part two of this three part mini-series have covered several reasons why non-core procurement is more complex, wider reaching and changes faster than most people imagine (compared to core or direct procurement). In this post, the final in the series, we will discuss why businesses need to approach procurement in a completely different way.
Why are businesses failing to get the most out of their non-core costs? (pt 2)
Part one of this three part mini-series discussed how non-core procurement is more complex, wider reaching and changes faster than most people imagine. In this post, we explore three further points, namely the necessary skills, knowledge and perspectives required to effectively manage non-core procurement.
Why are businesses failing to get the most out of their non-core costs? (pt 1)
Businesses are failing to get the most out of the non-core costs. Why? Well, simply put, because procurement is failing. But the issue here is far deeper than simply pointing your finger at the team of people in procurement - in fact, we would argue, the problem lies in five very different areas, which we’ll explore below.
Chief Executive.net: CEOs - don't prepare the pink slips just yet
Conventional wisdom and common sense suggest that the greatest ongoing expense for most companies is labor. However, Proxima's latest research contradicts this claim. Matthew Eatough aims to dispel the myth that keeping labor costs in line will maintain or even boost profitability.
Catalytics: the end of the unhealthy obsession with savings
We at Proxima believe too many businesses have an unhealthy obsession with savings. Whilst savings are of course important, no business ever saved its way to greatness.Procurement should be offering much, much more.
Spend Matters US: Quantifying suppliers’ contribution to revenue and profit - more than just productivity gains
Spend Matters discuss Proxima's latest research. In the report, Corporate virtualization – A global study of cost externalization and its implications on profitability, Proxima and FTI Consulting show the P&L impact that comes from increasing external expenditure (i.e., on suppliers) compared with declining labor costs, set in the context of the overall economic environment since 2009.
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.
Today's growth is fueled more by suppliers than internal staff
Today's definition of what a 'company' is varies dramatically from person to person, business to business and country to country. However, we can all agree that a company is no longer made up of just its people, its offices and its factories.
Infographic: Ever wondered about global business’ spend patterns?
Businesses around the world have been on a journey, whether deliberate or not, of cost externalization. A significant portion of any business’s revenues are now being spent outside their own organization. What was once a labor cost, is now a supplier invoice.
A global study of cost externalization and its implications on profitability
Businesses around the world have been on a journey, whether deliberate or not, of cost externalization. A significant portion of any business’ revenues are now being spent outside their own organization. What was once a salary, is now a supplier invoice.
Spend Matters UK/Europe: Proxima Report – Corporate Virtualization and the central role of suppliers in business
Peter Smith offers brief summary of Proxima's latest research - calling it an essential material to have in your library – a vital tool to help stakeholder engagement and promotion of the whole procurement raison d’etre!
Study confirms reducing supplier costs more effective for improving profit
CHICAGO, IL and LONDON, UK - September 9, 2013 - Proxima today released the results of a global study of nearly 2,000 publicly and privately traded companies, examining trends in spending and implications for profitability.
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.
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.
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...
Proxima helps Activision Blizzard create value and achieve sourcing success
With pressure to control costs mounting, Activision Blizzard turned to Proxima in 2012 to better manage costs, supplier and partner relationships and sourcing efforts more efficiently. And in just over a year, the partnership yielded significant savings to the business.|
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.
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.
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.
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.