CFOs and CPOs have many issues to overcome to control spend. In many organizations controlling spending in all areas seems like a never-ending task.
Some categories are continually over budget despite oversight and management time.
Do the stakeholders in your organization really want to control spend?
The obvious answer should be yes.
In my experience, the answer may not be as clear cut.
The systems and processes in place may be frustrating your purchasing team and stakeholders alike.
If this is happening, it is easy to understand why they may not be fully vested in controlling spend.
We all need to have the necessary information at the time of the decision. Unfortunately, many decision makers don’t have reliable information when they need it most.
See if any of these problems sound familiar:
- Spend owners have developed offline methods to manage spend because the tools that are available create barriers to efficiency especially on routine or repeatable events
- Stakeholders submit requests at the last minute or with weak specs that require significant follow up to get the correct data for RFPs
- Stakeholders view purchasing as an adversary with too many rules and steps
- Information systems aren’t set up to share key data across the organization
- Verifying negotiated savings requires endless queries to gather the data which then must be analyzed using spreadsheets
- Reporting and communication features of existing tools hinder rather than enhance analysis due to their limited capabilities
- Financial reporting and analysis doesn’t facilitate drilling down to the item, SKU or commodity level
- Contract management data isn’t housed in a central database and to mine the data is a tedious and time-consuming task
You may be surprised to learn that these issues exist regardless of the size of the organization. Any one of them has the potential to demoralize everyone involved in the procurement process.
I recently read an interview with a former CPO and he said that he spent his entire career building relationships and systems that fostered communication and problem solving.
I would say that he understood that if you want people to succeed and work together you must give them the tools and training.
If you want to demotivate people them make the routine difficult. A better approach is to take barriers down and make it easy for people to take ownership.
My dad taught me that you need to have the right tools and a clear goal if you are going to build anything. He was a machinist and skilled in multiple trades. He was a simple guy but I believe his approach will work well in almost every situation.
I want to end with one additional point that people may not want to talk about. Some stakeholders or even some people in procurement believe that if they cut costs or dramatically improve efficiency then their budgets or staff will be cut.
Sending the right message on this topic will go a long way to motivating everyone in the process to seek a better way.
If you want to explore a purchasing or procurement topic in greater detail, I invite you to request 30-minute discovery conversation. In my experience the next step will be apparent at the end of the call. I never assume that my recommendations will be right for everyone, so don’t expect a sales pitch. You can reach me at (973) 718-7071 x875. The call will be forwarded to my mobile phone if I am not in my office, which is pretty likely.
Organizations of all sizes are reducing costs and increasing efficiency, without changing the way they conduct business. If you would like to know how, simply give me a call or send me an email with your contact information and the best time to reach you.
You Won’t Drift to Success©
Think about it.
Until Next Time, I Wish You Great Success in Your Business and in Your Life