At the approximate time of this SIG publication, HCMWorks will be releasing our latest White Paper on Thought Leadership within Indirect Procurement. This piece authored by Dan Roehrs, VP of Business Development for HCMWorks and seasoned procurement executive, will outline the undisputed common denominator when it comes to driving adoption related to P2P systems.
In the world of indirect procurement, the procurement department is forced to deal with the widest and most diverse set of users and stakeholders in the company. Nowhere else in the organization do other business leaders have to face such broad reaching constituents, with a diverse and complex set of business requirements. Yet, time after time, we see organizations address transformation from some widely accepted “procurement playbook” where the steps take us down the path of Spend Analysis, Sourcing, Contracts, Transactional Management, Supplier Management and the quintessential “rinse and repeat”. It has to work, right? Everyone is doing it that way, and there’s rarely a consulting partner out there that would not also prescribe the “cure for procurement blues” any other way. This becomes the normal course of action and almost always, these multi-year projects end up costing the organization more time, resources and op-ex than budgeted. Budget overruns often results in finger pointing where blame goes to the software providers, the internal stakeholders and/or the lack of executive support. Then we “rinse and repeat”. We’ve all heard Einstein’s theory of insanity; keep doing the same thing and expect a different result. Procurement departments have to stop repeating the same old tried processes and focus their attention on a simpler and more clarifying approach.
There is a new and refreshing approach to these transformational woes and that begins with one word; VOLUME. Rather than spending months or years, analyzing, sourcing, negotiating and hoping to get adoption, professionals need only look to a few recent revolutionary procurement departments who have dramatically and rapidly achieve success by simply focusing on procure-to-pay transactional volume. Now this isn’t possible with just any “solution” but if you look at the common denominators these transformation programs share, it comes down to creating so much demand, so rapidly, that it outpaces any of the in-depth process and complicated analysis traditionally being experienced by procurement.
In the white paper, Dan also takes us through two key business case studies that he personally experienced with Salesforce.com and Rent-a-Center. Dan details how both organizations attempted the “tried and true” procurement approaches and failed, however, when they turned their focus to volume the tables turned and one organization found itself at over 90% of total spend under management.
These kinds of contrarian and paradigm shifts of how things are done are nothing new. Just look at business history to see examples of volume as a business case to success. Henry Ford’s creation of the assembly line changed the world of automobiles. It wasn’t the assembly line in and of itself; was the bi-product and efficiency of the assembly line that led to the volume of the Model T that could be produced. In the end it was the difference between selling a few cars and revolutionizing the automotive industry.
The same can be applied to retail giant Walmart, who at its core, is about one thing; Volume. It is that same over analysis, same o’l same o’l minded philosophy that has spelled the doom of so many retailers that came before Walmart. Even today, retailers like Macy’s, J.C. Penneyand other struggle because they focused on things that, in the end, do not matter near as much as the laser focus Walmart has on Volume.
The byproduct of adoption-led volume will result in better data to analysis, better sourcing, negotiations and contracts. More volume means less customizations and time consuming maintenance. More volume means being equipped with tangible information that any furthering improvements recommended become difficult to oppose. But a word of caution; discipline is paramount. Always remain mindful of the bigger picture and concentrate on adoption led VOLUME.
So you’ve read another blog, another white paper, attended another webinar or conference and sure, there’s real value to your organization by constantly asking yourself, “What does better look like?” But we would challenge you to take action. Make a difference by doing something. Quite simply, “Get it Done”.
To read the full position piece, Turn up the Volume, feel free to contact us directly for an electronic version of the paper. email@example.com
Listen to HCMWork's Ted Weyn, Managing Partner and Co-Founder, discuss Best Practices in Indirect Services with SIG’s CEO and President Dawn Evans, in our SIG Inside Source Executive Video Series.