Proxima — See the change

Insight & opinion

 

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.

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Top 5 tips for managing your virtualized/extended enterprise

Supplier Management

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.

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Why are businesses failing to get the most out of their non-core costs? (pt 3)

Non-core costs

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.

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Why are businesses failing to get the most out of their non-core costs? (pt 2)

Non-core costs

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.

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Why are businesses failing to get the most out of their non-core costs? (pt 1)

non-core costs

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.

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Chief Executive.net: CEOs - don't prepare the pink slips just yet

Proxima media mention; Chief Executive

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.

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The broken bridge between business need and business supply

Supplier Management

On average, two thirds of any business’ activities today are performed outside of their organization by third party suppliers (see this research for more detail).  And it’s a growing trend.

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Catalytics: the end of the unhealthy obsession with savings

Proxima image; Matthew Eatough

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.

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Spend Matters US: Quantifying suppliers’ contribution to revenue and profit - more than just productivity gains

Proxima media mention; Spend Matters logo

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.

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Some important questions for CFOs (UK)

Hear why the conventional approach of beating up suppliers and pushing them away means there is real and untapped value sitting in companies across thousands of suppliers.

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Some important questions for business leaders (US)

Hear why the conventional approach of beating up suppliers and pushing them away means there is real and untapped value sitting in companies across thousands of suppliers.

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Spend Matters UK/Europe: Redefining procurement - non-labor cost’s growing impact on the bottom line

Proxima image; Spend Matters logo

Proxima’s latest report, found a clear trend line between 2009 and 2011 around labor cost and non-labor cost (both as percentages of revenue) in companies around the world.

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Corporate virtualization - 100 years in the making

Guy-New

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.

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Today's growth is fueled more by suppliers than internal staff

Supplier Management

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.

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CFO: Cutting costs? Don’t look at head count first

Proxima media mention; CFO.com logo

Trimming non-labor costs, especially by better managing your fast-growing population of external service providers, likely will have greater impact

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Infographic: Ever wondered about global business’ spend patterns?

Non-core costs

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.

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Corporate virtualization

Proxima image; Corporate virtualization

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.

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Spend Matters UK/Europe: Proxima Report – Corporate Virtualization and the central role of suppliers in business

Proxima media mention; Spend Matters

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!

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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.

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The Sunday Times: Heads don’t need to roll, Mr Axeman

 Proxima media mention; The Sunday Times

Our latest global study, featured in The Sunday Times, shows companies may find greater cost savings in their supply chains.

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How suppliers have changed Dutch management practices

suppliers impact on dutch business

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.

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CFO.nl: 3 new sources of profitability for Dutch businesses

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The Wall Street Journal: Outsourcing labor continues, poses risks for some

wsj

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The externalization of today’s Dutch corporation

Proxima blog

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.

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The Dutch market: looking outwards

Proxima blog

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.

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Economia: Counting heads

Economia300

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How corporate virtualization has changed the game for Dutch business

Proxima blog

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.

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Supply Management: Procurement could unlock billions in profits

Supply_management_300x300

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Spend Matters UK/Europe: Procurement isn’t aligned with strategies for business success – Guy Strafford comments

Spendmatters300

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The 'virtual' Dutch company: an infographic

Proxima blog

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.

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New rules for cost management

New_rules

How 'corporate virtualization' is changing the game for Dutch businesses

Reducing non-labor costs could increase profits among Dutch AEX25 companies by billions of euros a year, a new report has uncovered.

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Procurement not following rules for success, time for a rethink

Guy-New

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...

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Proxima helps Activision Blizzard create value and achieve sourcing success

Activision_Blizzard_logo

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.|

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The impact of ‘corporate virtualization’ on your supply chain

Guy-New

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.

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Faltering growth means proactive supplier engagement is required

Finance-Chart

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.

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Managing cost to generate growth and unlock competitive advantage

managing-cost-to-generate-growth

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.

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How to avoid value-erosion and cost-leakage in Financial Services

Ian-New

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.

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Banks seek agility, transparency and transformation from procurement

Ian-New

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.

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Proactive protection amid uncertain times

Guy-New

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 one’s which give the most accurate or best insight is always a challenge.

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Facilitating change in Financial Services

Ian-New

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.

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Business Finance: Standing on the edge of the cliff - cut costs, not jobs

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How the 'shareholder spring' should evolve

proxima-insight-and-opinion-v2

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.

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The future of cost management


Continuing economic pressures means that today’s leaders need to be flexible while taking a holistic view of their business.

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Shareholder activism and cost management


Procurement is not about budget cuts. It is a mechanism to improve profitability and support growth, by helping people spend their budgets wisely.

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Are you adding value or just cutting costs?



In complex global business environments, it’s not easy to unify the unique skills of finance and procurement. But doing so will help aid growth and improve productivity.

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Cost management is a leadership issue, not a procurement issue


Leaders who manage their third party cost base effectively and creatively can derive significantly more benefits than most achieve today.

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Levers of profitability

To improve profitability, leaders should take a fresh look at how their third party cost base is managed.

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Are executive salaries becoming less relevant to a business?

Guy-New

I was and contemplating a potential reblossoming of the shareholder spring, particularly with regards to director's’ remuneration.

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Critical business costs are no longer 'people costs'

Business has changed: Labor costs are now significantly outweighed by third party costs. As a result, the old spans of control no longer apply.

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A new opportunity for CFOs amidst uncertainty and volatility


The pressure on CFOs to cut the fat and improve how the cost base is managed intensifies as the economic malaise continues.

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