E purchasing technology drives new economics for commerce

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  • 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.
  • 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
  • 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.
  • 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.
  • 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.
  • E purchasing technology drives new economics for commerce

    1. 1. 1 © 2011 Forrester Research, Inc. Reproduction Prohibited
    2. 2. ePurchasing Technology Drives NewEconomics For CommerceDuncan Jones, Vice President, Principal AnalystJanuary 17, 20122 © 2011 Forrester Research, Inc. Reproduction Prohibited 2009
    3. 3. New developments inePurchasing technologycan help Procurement gobeyond the low hangingfruit 3 © 2011 Forrester Research, Inc. Reproduction Prohibited
    4. 4. AgendaProcurement faces 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. 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. 6. Global disruptions have become common news6 © 2011 Forrester Research, Inc. Reproduction Prohibited
    7. 7. Economic volatility can disrupt your supply chain Whether prices are going up or downSource: www.financial-portal.com 7 © 2011 Forrester Research, Inc. Reproduction Prohibited
    8. 8. 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 Create tight strategic Innovation sources, anywhere in the partnerships world Answer: Do Both – create tighter partnerships in some areas while increasing competition in others 8 © 2011 Forrester Research, Inc. Reproduction Prohibited
    9. 9. Collaboration: working more closely with its keysuppliers helped Ford reverse its decline Ford rose to 5th in JD Power’s quality ranking, above Toyota and Nissan Source: Planning Perspectives, Inc9 © 2011 Forrester Research, Inc. Reproduction Prohibited
    10. 10. Suppliers’ willingness to co-innovate correlates with other measures of the relationship’s strength 5 4.5 4 3.5 Honda Toyota 3 Ford Nissan 2.5 GM Chrysler 2 1.5 Willingness to Willingness to Working Supplier trust OEM Is invest in new share new Relations Index of OEM Preferred technology technology Customer10 © 2011 Forrester Research, Inc. Reproduction Prohibited
    11. 11. Supplier classification exampleBusiness Value Timescale/ Cost To Replace 11 © 2011 Forrester Research, Inc. Reproduction Prohibited
    12. 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. 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. 14. Figure 2. CIOs need shift budget from steady-state to new initiatives May 2011 “Forrsights: The Software Market In Transformation, 2011 And Beyond”14 © 2011 Forrester Research, Inc. Reproduction Prohibited
    15. 15. 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.15 © 2011 Forrester Research, Inc. Reproduction Prohibited
    16. 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. 17. Beware of IT colleagues who want to prevent self- provisioning and prohibit specialist solution providers Prevent Legacy Core Systems Repl17 © 2011 Forrester Research, Inc. Reproduction Prohibited
    18. 18. Agenda Procurement faces conflicting priorities in 2012 Four trends drive business technology developments We’re beginning to see their impact on ePurchasing Summary recommendations18 © 2011 Forrester Research, Inc. Reproduction Prohibited
    19. 19. Important management information is distributed across multiple silos ERP eSourcing Contracts EDI19 © 2011 Forrester Research, Inc. Reproduction Prohibited
    20. 20. 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?20 © 2011 Forrester Research, Inc. Reproduction Prohibited
    21. 21. Supplier managers need to combine internal and externalinformation sources into a formal risk analysis process21 © 2011 Forrester Research, Inc. Reproduction Prohibited
    22. 22. Forrester named this emerging category “SupplierRisk and Performance Management”22 © 2011 Forrester Research, Inc. Reproduction Prohibited
    23. 23. 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 collection23 © 2011 Forrester Research, Inc. Reproduction Prohibited
    24. 24. Most enterprises still have a buyer-centric approach to ePurchasingPtolemy 24 © 2011 Forrester Research, Inc. Reproduction Prohibited
    25. 25. The network-centric approach is betterCopernicus 25 © 2011 Forrester Research, Inc. Reproduction Prohibited
    26. 26. But a universe of discrete networks is costly for suppliers, and less effective for buyersGallileo 26 © 2011 Forrester Research, Inc. Reproduction Prohibited
    27. 27. We’re now seeing the emergence of global communities of buyers and sellersEinstein? •Scale and reach to be effective •Unstructured collaboration, not merely transactions •Sharing information with your peers 27 © 2011 Forrester Research, Inc. Reproduction Prohibited
    28. 28. 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 messaging28 © 2011 Forrester Research, Inc. Reproduction Prohibited
    29. 29. 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 processes29 © 2011 Forrester Research, Inc. Reproduction Prohibited
    30. 30. Thank youDuncan Jones+44 7920492913djones@forrester.co.ukwww.forrester.com © 2009 Forrester Research, Inc. Reproduction Prohibited

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