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Jose Oliveira Valentede. Profit from Procurement
Table of Contents
List of Illustrations
Guide
Pages
PROFIT FROM PROCUREMENT. Add 30% to Your Bottom Line by Breaking Down Silos
1 INTRODUCTION: Why Procurement, and Why Now? What Follows Is a True Story
Procurement Is a Company's Number One Cost, Making It a Huge Profit Lever
Why Is Procurement Not Optimized?
Remit
Mindset
Vicious Cycle…and Opportunity
The Birth of Strategic Sourcing—Dawn of a New Era…or Not?
Bad Best Practice
Why Now?
About This Book
2 AMBITION: Ensuring You Are Set Up for Success. A Dirty Procurement Word
Walk, Then Run
What to Aim For
The function with no standing
The function with traction
The mature function
Getting Buy-In
Achieving Your Ambition: Customer Focus
3 SOURCING EXECUTION: Making Sure That the Engine Room Delivers
Building the Baseline / “Profiling the Category”
Conducting a Supply Market Analysis
Drawing Up the Sourcing Strategy
Executing an RFP Event
Conducting Supplier Negotiations and Selection
Sourcing Tools
Savings Credibility
Sourcing Gates
Time with Stakeholders
Program Management
Execution
After the Storm
Sourcing Is the Engine Room
4 PEOPLE: Building a Winning Procurement Team. Who Do We Need in Procurement?
The CPO
Today's Old School Procurement Skillset
Tomorrow's Procurement Team
Define success and align incentives
Build a team of diverse skills
Ensure the team is versatile
Focus on execution
Attraction and Retention of Talent
Being Bold When Hiring
5 OPERATING MODEL: Making It Work in Practice. Documenting the Future Model
The Center-Led Approach. The foundational layer
The category layer
Shifting from Reactive to Proactive
Organic Growth to a Proactive Focus. Step 1: Visibility of work
Step 2: Start prioritizing
Step 3: Build and maintain a hopper of opportunities
Isn't This Just Agile?
6 CROSS-FUNCTIONAL CHANGE: Repositioning the Function as a True Partner
Why Is Cross-Functional Change Management Important?
Procurement Often Lacks the Required Skills and Mindset
How Do We Do It Effectively?
1) You need to execute well and have good deliverables
2) You need to engage formally and meaningfully at all levels
3) You need to use effective stakeholder engagement skills
4) You need to exhibit a service mindset
5) You need to position yourself internally as a proactive dealmaker
6) You need to share credit, and help rather than take away
7) You need air cover
Specific Functions
What Can We Learn from the Consultants?
Conclusion
7 SUPPLIERS: Engaging Effectively
Supplier Management—The Traditional Approach
The Strategic Supplier—a Competitive Advantage
Shifting the Mindset
Beware the RFP
8 NON-SAVINGS PRIORITIES: Balancing Your Objectives. Is There More to Procurement than Savings?
Consult the Business First
The Procurement Balanced Scorecard
Sustainability
Supply chain risk and resilience
Customer service levels and accessing innovation
Sustainability
Social sustainability
Environmental sustainability
Financial sustainability
Get the Right Sustainability Key Performance Indicators
Embarking on Your Sustainability Program
9 SAVINGS REALIZATION: Stemming the Leaks
What Is a Saving?
The Importance of Data and Baselining
Savings Need to Be Delivered Before They Can Be Measured
The CFO Needs to Be Procurement's Best Friend
TINCSIBR
It's All About Compliance
Effective Budgeting
Savings Leakage Points
Key Steps to Stem the Leakage
10 TECHNOLOGY: Investing in and Adopting the Right Tools. A Procurement Revolution That Hasn't Happened
The Steam Powered Tesla
Technology's Promise to Procurement
Investing in Technology—the Fundamentals
Own your data and don't over-configure!
Visualize your data
Manage your knowledge
Technological Disruption Is Coming!
11 CONSULTANTS: Using Consultants in Procurement
Why Use Consultants?
How to Select the Right Consulting Partner
How Should I Best Use the Consultants?
How Do I Make Sure That I Get the Best Value from My Consultants?
It's All About the People
Weaning Yourself Off the Drug
What Do We Do When It All Goes Horribly Wrong…or How to Avoid That Happening
12 PRIVATE EQUITY: Learning Lessons from PE
Private Equity and Procurement
Changing Attitudes
So Why Are Procurement and PE Such a Good Match?
1) PE is all about value creation and EBITDA, a great fit with Procurement
2) PE “gets” the Procurement opportunity and creates a platform to deliver the potential
3) PE helps with speed and rigor of execution
4) Joint ownership creates the right incentives and behaviors
5) PE elevates Procurement to Executive Committee level, which facilitates cross-functionality
6) Leading PE funds drive Procurement as a structured program across their portfolios
What Can Non-PE Learn from PE?
13 ROADMAP: Making a Concrete and Realistic Plan
Transforming by Doing
Putting the Plan Together
Start by Talking to People…or Even Listening to People!
1) Procurement ambition and role
2) Functional improvement plan
3) Sourcing savings execution plan
4) Procurement investment business case
5) Program structure and governance
Putting It All Together
Getting It Bought Off
Concluding Thoughts
14 CONCLUSION: Summary and Final Thoughts
Procurement Is Not Rocket Science, but It's Difficult to Do It Right
1) Procurement represents a huge untapped opportunity
2) You need to have a strong team that's appropriately organized
3) You have to drive a sourcing program and execute it well
4) Savings credibility is vital; without it, you will fail
5) Stakeholder buy-in and cross-functional working is everything
6) You have to learn to walk before you can run
7) Technology is not the answer—it's only an enabler, and must be used judiciously
Breaking Down Silos
Acknowledgments
About the Authors
List of Acronyms
Index
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