E purchasing technology drives new economics for commerce

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  • Riskier environment – economic, political, environmental; price volatility; Need to drive down costs – by consolidating spend with fewer suppliers, while increasing the bidder poolNeed to co-innovate with suppliers
  • Riskier environment – economic, political, environmental; price volatility; Need to drive down costs – by consolidating spend with fewer suppliers, while increasing the bidder poolNeed to co-innovate with suppliers
  • Image:http://clichegal.blogspot.com/
  • So how do you decide which suppliers will fit in which category?
  • To add or remove rows in the table:Select the table. Your cursor will change to an icon of two lines and an arrow above and below will appear on mouse-over of the baseline of the row.Right-click and select INSERT > ROW BELOW. Or DELETE ROW.To add a row after the last row, you can press [Tab], and the cursor will go to a new row.Highlighting new areas:Select the bracket group from the right bracket. Hold SHIFT and pull cursor down over the next bullet item. Select the previously highlighted text and in the HOME tab unclick the [B] button for bold, and click on the [A]buttonand choose the gray swatch (Gray-50%, Accent 5) second to last in the top row of the palette. Select the text for the newly highlighted area and click the [B] button for bold, and click on the [A]buttonand choose black.
  • Use of ePurchasing to assist supplier tiering and then monitor performance at an intensity level appropriate to the tier.
  • Facebook was only effective because it dominated. E.g. half your friends are at party down the road that was advertised on BeboWe wont accept such a monopoly in a B2B context, but we will accept 3 or 4 community platforms, especially if they integrate with each other.
  • This prompted us to research the market, and publish our analysis in a couple of reports of which this is one
  • We identified a maturity curve, from basic self-service as part of master data management, through wider risk & performance reporting, to a full optimization stage, including processes to address problems and drive improvement. For example, early stage processes disqualify suppliers that fail r&p criteriaAdvanced processes help those suppliers improve.
  • Use of ePurchasing to assist supplier tiering and then monitor performance at an intensity level appropriate to the tier.

Transcript

  • 1. 1 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 2. ePurchasing Technology Drives NewEconomics For CommerceLutz Peichert, Vice President, Principal AnalystJanuary 19, 20122 © 2009 Forrester Research, Inc. Reproduction Prohibited 2011
  • 3. New developments inePurchasing technologycan help Procurement gobeyond the low hangingfruit 3 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 4. AgendaProcurement leaders face conflicting priorities in 2012Four trends drive business technology developmentsWe’re beginning to see their impact on ePurchasingSummary recommendations4 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 5. AgendaProcurement leaders face conflicting priorities in 2012Four trends drive business technology developmentsWe’re beginning to see their impact on ePurchasingSummary recommendations5 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 6. What forces will shape your world in 2020? 2010 2014 2016 20206 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 7. Global disruptions have become common news7 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 8. Economic volatility can disrupt your supply chainSource: www.financial-portal.com 8 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 9. Sourcing’s Goals Pull Us In Two Directions Number of Rationalize Expand Suppliers Aggregate demand to Costs  Expand the bidder pool get economies of scale to increase competition Dump financially weak  Diversify, multi-source to Risk vendors reduce over-dependence Focus vendor  Introduce new blood to management’s Performance combat complacency attention  Search for new sources, Create tight strategic Innovation anywhere in the world partnerships Answer: Do Both – create tighter partnerships in some areas while increasing competition in others 9 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 10. Collaboration: working more closely with its key suppliers helped Ford reverse its decline Ford rose to 5th in JD Power’s quality ranking, above Toyota and Nissan Source: Planning Perspectives, Inc10 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 11. Supplier classification exampleBusiness Value Timescale/ Cost To Replace 11 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 12. Relationship classification example Spouse Close Relative FacebookSocial Value Friend Child@ LinkedIn University Connection Timescale/ Cost To Replace 12 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 13. Agenda Procurement faces conflicting priorities in 2012 Four trends drive business technology developments We’re beginning to see their impact on ePurchasing Summary recommendations13 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 14. Forrester has identified four broad themes driving business technology trends  Empowered employees and customers energize leading organizations.  Everything-as-a-service (XaaS) offers new technology acquisition and consumption options.  The App Internet connects mobile users to near-limitless information.  Big data extends our digital horizon and changes the way we do business.14 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 15. CIOs need shift budget from steady-state to new initiatives May 2011 “Forrsights: The Software Market In Transformation, 2011 And Beyond”15 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 16. Businesses cannot, and should not, get all theirtechnology innovation from one source Self- provisioned iApps Key business applications New supplier search Core Collaboration Systems SRPM ERP eSourcing16 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 17. Agenda Procurement faces conflicting priorities in 2012 Four trends drive business technology developments We’re beginning to see their impact on ePurchasing Summary recommendations17 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 18. Most enterprises still have a buyer-centric approach to ePurchasingPtolemy 18 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 19. The network-centric approach is betterCopernicus 19 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 20. But a universe of discrete networks is costly for suppliers, and less effective for buyersGallileo 20 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 21. We’re now seeing the emergence of global communities of buyers and sellers •Scale and reach to be effective •Unstructured collaboration, not merely transactions •Sharing information with your peers21 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 22. Important management information is distributed across multiple silos ERP eSourcing Contracts EDI22 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 23. The technology giants have misled us several times  “Implement one ERP product everywhere”  “Consolidate to a single instance”  “Build a data warehouse”  “Buy a spend analysis project”  “Buy a supplier assessment project”  So why should we believe them now?23 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 24. Supplier managers need to combine internal and externalinformation sources into a formal risk analysis process24 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 25. Forrester named this emerging category “SupplierRisk and Performance Management”25 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 26. SRPM is more than data gathering and reporting Performance Risk optimization management Performance monitoring Supplier Information Action needed Process management Searching for insight Self- registration One supplier master Basic data collection26 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 27. Vendor viability Risk VendorVendor risk tolerance viability27 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 28. Forrester sees forward looking risk management as a must28 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 29. Agenda Procurement faces conflicting priorities in 2012 Four trends drive business technology developments We’re beginning to see their impact on ePurchasing Summary & recommendations29 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 30. How can you make use of these forms of unstructured collaboration?  Idea forums that include key suppliers – Users’ problems, suppliers’ ideas, voting on which ones to take forward, workspace for project teams to share information  Engineering change process – Consider the impact of proposed modifications before they are put into effect  Community performance rating – Aggregate objective and subjective data from your peers to evaluate prospective suppliers  Urgent problem resolution – Creation of ad hoc teams, live web conferencing, asynchronous messaging30 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 31. What can you do now? If you’re just starting out… If you’re further along… • Don’t wait until you have a • Use technology to work even disaster to create the more closely with your key business case for SRPM suppliers • Convert Ptolemaic or • Focus SRPM attention based Copernican supplier on importance, not just collaboration initiatives into spend community programs • Automate analytics • Start somewhere • Manage improvement important, but doable processes31 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 32. Thank youLutz Peichert+49 69959 29846lpeichert@forrester.comwww.forrester.com © 2009 Forrester Research, Inc. Reproduction Prohibited