Joe Payne - Managing Indirect Spend

1 Cover

2 Title Page Managing Indirect Spend Enhancing Profitability Through Strategic Sourcing Second Edition JOE PAYNE WILLIAM R. DORN DAVID PASTORE JENNIFER ULRICH

3 Copyright

4 Dedication

5 Preface WHAT THIS BOOK WILL DO FOR YOU WHO WE ARE HOW THIS BOOK IS ORGANIZED BEGINNING YOUR JOURNEY

6 Acknowledgments

7 About the AuthorsJOE PAYNE WILLIAM R. DORN DAVID PASTORE JENNIFER ULRICH

8 PART I: The Process CHAPTER 1: An Introduction to Strategic Sourcing VISIBILITY OBJECTIVITY PROJECT MANAGEMENT TOOL IN SUMMARY CHAPTER 2: Data Collection and Spend Analysis WHAT IS DATA COLLECTION? WHERE TO START? DEALING WITH DECENTRALIZED DATA SETS SPEND ANALYSIS SPEND ANALYSIS TOOLS KICKING OFF THE PROJECTS END‐USER INTERVIEWS LINE‐ITEM DETAIL AND GETTING THE MOST FROM YOUR SUPPLY BASE SUPPLIER INTERVIEWS ANALYZING CONTRACTS AND PRICING AGREEMENTS THE FINAL ANALYSIS: BUILDING A BASELINE IN SUMMARY CHAPTER 3: Conducting Research TYPES OF COST‐SAVINGS OPPORTUNITIES UNDERSTANDING THE CATEGORY IDENTIFYING SUPPLIERS UNDERSTANDING THE SUPPLY CHAIN UNDERSTANDING CURRENT MARKET CONDITIONS UNDERSTANDING THE FACTORS OF COST REVIEW OF TECHNOLOGIES, PROCESSES, PRODUCTS, AND SERVICES COLLECTING MARKET INTELLIGENCE THROUGH THE RFI PROCESS IN SUMMARY CHAPTER 4: The RFx Process USING THE RFI TO BEGIN THE SOURCING PHASE DEVELOPING YOUR SOURCING STRATEGY GOING TO MARKET GENERATING THE RFP AND RFQ SUPPLIER SELECTION AND SCORECARD CRITERIA ADMINISTERING THE RFX PROCESS REVERSE AUCTIONS ALTERNATIVES TO THE RFX—THE IMPORTANCE OF FLEXIBILITY AND CREATIVITY IN THE SOURCING PROCESS IN SUMMARY CHAPTER 5: Scorecarding Suppliers MEASURING VALUE: DEVELOPING SELECTION CRITERIA THE QUANTITATIVE ANALYSIS: EVALUATING THE BID PORTION OF SUPPLIER PROPOSALS THE QUALITATIVE APPROACH: DEVELOPING THE RFP MATRIX REFERENCES TEAMWORK AND OBJECTIVITY TECHNOLOGY'S ROLE IN SUMMARY CHAPTER 6: Negotiations KNOWING WHAT TO NEGOTIATE NEGOTIATION OPTIMIZATION: DEVELOPING FINAL TARGETS GETTING TO “NO” WHAT NOT TO DO IN SUMMARY CHAPTER 7: Get It in Writing ESSENTIAL COMPONENTS OF A CONTRACT ATTACHMENTS CONTRACT MANAGEMENT MAKING THE BEST USE OF YOUR LEGAL TEAM CONTRACTING PITFALLS AND LANGUAGE TO AVOID WORKING OUTSIDE OF A CONTRACT: PRICING AGREEMENTS AND HANDSHAKES IN SUMMARY CHAPTER 8: Implementation and Continuous Improvement THE CHALLENGES OF IMPLEMENTATION OVERCOMING CHALLENGES MONITORING IMPROVEMENTS AFTER IMPLEMENTATION SAVINGS AND COMPLIANCE BEST PRACTICES CONTINUOUS IMPROVEMENT INITIATIVES IN SUMMARY CHAPTER 9: What Not to Do During a Strategic Sourcing Initiative CREATING OVERLY COMPLEX OR LONG RFPs LETTING THE SUPPLIER WRITE THE RFP FOR YOU RFP SPAM IN SUMMARY

9 PART II: The Tools CHAPTER 10: The Importance of Market Intelligence THE TYPES OF MARKET INTELLIGENCE COMPONENTS OF SUCCESS BREAKING DOWN THE COMPONENTS IN SUMMARY CHAPTER 11: Introduction to Procurement TechnologyA BRIEF HISTORY OF PROCUREMENT TECHNOLOGY THE SOLUTION LANDSCAPE UPSTREAM AND DOWNSTREAM PROCUREMENT SPEND ANALYSIS SOURCING REVERSE AUCTIONS CONTRACT LIFECYCLE MANAGEMENT (CLM) SUPPLIER INFORMATION MANAGEMENT (SIM) SUPPLIER PERFORMANCE MANAGEMENT (SPM) SUPPLIER RISK MANAGEMENT (SRM) PROCUREMENT (P2P) INVOICING AND PAYMENT S2P INDIVIDUAL PRODUCTS VERSUS FULL‐SUITE SOLUTIONS IN SUMMARY CHAPTER 12: Increasing Stakeholder and Supplier Engagement WHAT IS A STAKEHOLDER? WHO ARE THE STAKEHOLDERS? THE VALUE BROUGHT BY STAKEHOLDERS IN SUMMARY CHAPTER 13: Leveraging Group Purchasing Organizations TYPES OF GPOS SERVICES PROVIDED BY GPOS BENEFITS OF GPOS GPO DISADVANTAGES BEST PRACTICES FOR MANAGING GPO RELATIONSHIPS IN SUMMARY

10 PART III: Examples from the Field CHAPTER 14: Supplier Collaboration OPENING UP YOUR REQUIREMENTS GIVING SUPPLIERS WHAT THEY NEED HELPING SUPPLIERS WITH THEIR SUPPLY CHAIN COLLABORATING WITH SUPPLIERS IN SIMILAR INDUSTRIES IN SUMMARY CHAPTER 15: Leveraging Supplier Feedback AVOIDING THE RFP PROCESS MAKING YOURSELF THE IDEAL CUSTOMER EXAMPLES OF LEVERAGING SUPPLIER FEEDBACK SUCCESSFULLY IN SUMMARY CHAPTER 16: Opportunity Assessment and Sourcing RoadmapINTRODUCTION STARTING WITH SPEND ANALYSIS PROCUREMENT TAXONOMY OPPORTUNITY ASSESSMENT ROADMAP IN SUMMARY

11 PART IV: How to Do It CHAPTER 17: Determining Project Complexity COMPLEXITY DRIVERS IN SUMMARY CHAPTER 18: Planning and Optimizing Low‐complexity Projects GETTING FAMILIAR WITH LOW COMPLEXITY WHERE TO FIND LOW COMPLEXITY PROJECTS DEALING WITH UNEXPECTED COMPLEXITY ADDING COMPLEXITY WITH PURPOSE FACTORING LOW‐COMPLEXITY PROJECTS INTO YOUR ROADMAP IN SUMMARY CHAPTER 19: Navigating High‐Complexity Projects PROCESS DRIVERS PROJECT DRIVERS IN SUMMARY CHAPTER 20: Building an Indirect Procurement Team DEFINING THE ROLE OF PROCUREMENT DESIGNING THE FRAMEWORK BUILDING THE TEAM IN SUMMARY CHAPTER 21: Team Training and Development WHERE TO BEGIN BALANCING THE CONTENT HOW TO MAKE IT STICK IN SUMMARY CHAPTER 22: Process, Policy, and Digitalization ENACTING THE CHANGE THE ROLE OF GOVERNANCE ENABLING THE TEAM THROUGH TECHNOLOGY IN SUMMARY

12 Index

13 End User License Agreement

1 Chapter 2TABLE 2.1 General Ledger InformationTABLE 2.2 General Ledger Information with Cleansed Supplier NameTABLE 2.3 Pivot Table with Category and SupplierTABLE 2.4 Project Road Map

2 Chapter 4TABLE 4.1 Sample Request for Proposal MilestonesTABLE 4.2 Sample Table of RFP RequirementsTABLE 4.3 Summary Page of Volume Information

3 Chapter 5TABLE 5.1 Quality and ServiceTABLE 5.2 RFP Scorecard Summaries

4 Chapter 6TABLE 6.1 Office Supplies Bid ResultsTABLE 6.2 Office Supply Bid Results with Lowest Cost

5 Chapter 8TABLE 8.1 Baseline Spend and Projected Savings

1 Chapter 4FIGURE 4.1 Buyer Spend Classifications

2 Chapter 16FIGURE 16.1 Demonstrates a simple overlay of the middle savings percentage n...FIGURE 16.2 The total master categories of spend by distribution and is an e...FIGURE 16.3 The estimated opportunity distribution for the same categories t...FIGURE 16.4 Several pieces of information. On the x ‐axis, we see the assigne...FIGURE 16.5 The collective projects in this example show an annualized $3.1 ...FIGURE 16.6 A waterfall diagram helps to better emphasize the difference bet...

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2 Table of Contents

3 Begin Reading

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