45. Future: Risk Management<br />Risk<br />More needs to be done to manage risk <br /><ul><li>the political, environmental, and economic instability of late will stay, and leaders recognise that risk must be proactively managed.</li></ul>Future leaders will need to:<br /><ul><li>Realise risk issues have a greater cost impact, and take up far more time, than most buyers’ efforts to capture savings through negotiation.
46. Address supplier and price volatility risks when developing procurement strategies.
47. Apply a comprehensive, end-to-end approach to anticipating, monitoring and mitigating risk.
52. Future: Closed Loop Spend Management<br />Category Ownership & Policies<br />Each Cost Category owner is responsible for identifying and prioritising significant opportunities in their area which are easy to implement<br />Low Hanging Fruit<br />ILLUSTRATIVE<br />High<br />Size of opportunity<br />Priority <br />for <br />Implementation<br /><ul><li>Define maximum CRM spend by segment
53. Enforce max. phone allowance
54. Do not allow business class for flights < 6h
55. Define POS maximum spend by segment / Only purchase in POS Catalogue
56. Challenge Consultant spend not supported by strategic plan
57. Implement new car policy and review entitlement</li></ul>Medium<br /><ul><li>Reduce # travels to same destination
58. Challenge sponsorship costs vs. brand equity building
59. Optimize office space in sales centers
60. Define mandatory agency fees list</li></ul>Low<br /><ul><li>Challenge Market Research expenses
64. Future: Closed Loop Spend Management<br />Procurement<br />Actual consumption is triggered by the “I need” portal in which policies and how to order/work with procurement is guided in the so-called buying channels<br />“I need” Portal<br /><ul><li>Policies and how to order/work with procurement is guided in the so-called buying channels
65. Preferred suppliers are presented
66. Prerequisites and other useful information can be consulted</li></ul>Procurement Middle Office<br /><ul><li>Invoices are booked by the back-office in the right cost category
67. Often requiring chart of account changes/ training of AP people to properly book invoices
82. Immediate Next Steps<br />1<br />3<br />Advanced Analytics<br />Closed-Loop Spend Management<br /><ul><li>Analyse what could you do with information; then work backwards to ensure you’ve got the right data and tools to extract, process and present intelligence
83. Invest in systems; ensure they are integrated
84. Create awareness; change culture from gut-feel to fact-based decision making
85. Consider processes that can be supported by data
86. Create visibility on the cost structure; review GL accounts and standardize across the company; key to enable consistent benchmarking and analysis
87. Reviewing policy compliance is the first step in finding savings
88. Increase number of "hands-free" transactions, improves contract / channel compliance and optimises the operational effort</li></ul>4<br />2<br />Risk Management<br />Workforce Capabilities<br /><ul><li>Competition no longer matter of being Company vs Company it is value chain vs value chain
89. Organisational boundaries overlap those of partners encouraging trust and a free exchange of information/knowledge.
90. By adopting a collaborative approach with suppliers costly levels of inventory holding are lower and cycle times (operating and cash2cash) reduced.
91. Effective strategies are those that identify areas of risk and work to minimise its effects - build risk analysis into strategic analysis and decision making.
92. In the current environment market and financial risk are no longer constants or given they change rapidly - that's why the GFC caught many organisations unawares.
106. Future: Closed Loop Spend Management<br />Zero-based Budget<br />Budget holders build their budget zero-base with great amount of detail, adhering to top down targets and strict global policies<br />Travel Budget Template<br />Budget Templates<br />ILLUSTRATIVE<br /><ul><li>Are built for all (Sub-)Categories
107. Contain enough details to allow full understanding on the budget construction
108. Might have a different level of detail, depending on the Category
110. Future: Closed Loop Spend Management<br />Category Ownership & Policies<br />Challenging cost is no longer a Finance-only activity; Category ownership creates a shared responsibility driving sustainable savings opportunities<br />ILLUSTRATIVE<br />…who has a set of responsibilities but is also empowered to make tough decisions<br />For each category, an owner is appointed at the top level…<br /><ul><li>Have deep understanding of cost drivers