Procurement outsourcing deals will grow by 20 per cent in 2012 and expand to other areas of the supply chain such as order fulfilment, inventory management and logistics.

This is according to analysts at research firm Everest Group. Writing in its 2012 Market Predictions report, the company said buyers will expand deals across the supply chain against a backdrop of acquisitions among procurement service providers.
The research said contract sizes will also rise, with chief financial officers increasingly driving discussions on procurement outsourcing. This will lead to more outsourcing deals that bundle finance and accounting together with purchasing.
Everest said buyers will take an end-to-end approach concentrating on source-to-contract (S2C) and procure-to-pay (P2P) processes. More acquisitions and partnerships between P2P-focused providers and S2C providers are expected in 2012 to provide complete solutions.
More direct spend categories, such as maintenance and repair, are expected to become part of procurement outsourcing deals.
Everest said the government sector around the world would see more activity in 2012, with the report singling out the UK in line with its current work on procurement optimisation.
The report said that while the procurement market is dominated by Accenture, ICG Commerce and IBM, there is strong competition on the next rung of big contenders because they are experiencing rapid growth.

Find out more: http://www.supplymanagement.com/news/2011/global-outsourcing-of-procurement-expected-to-grow-in-2012/?utm_source=Adestra&utm_medium=email&utm_term=

In the 1970s, consumers found themselves caught up in a ‘format war’ – the battle for supremacy between electronic companies to produce the market-leading videotape recording system.
In the end, the market was narrowed to two choices – Betamax or VHS and consumers who had opted for Betamax quickly found the only place for it was the scrapheap.
What has this mini trip through history got to do with services procurement? It’s simple. Procurement professionals and commissioners of complex services are rapidly facing a time when they will reach their own Betamax/VHS moment. Do they continue ad infinitum with the primary contractor-managed services model to buy these services or do they consider another way – the dynamic purchasing system (DPS)?
Let’s look at the evidence. In the services procurement categories, frameworks reduce the supplier base in a four-yearly procurement exercise that restricts ongoing competition and, taken to the extreme, relies on prices and quality levels set three years and 364 days previously. Small businesses find it hard to compete in bureaucratic and time-consuming procurement exercises; equally they often find it difficult to quote four-year fixed prices.
This brings me to another point, one that is extremely topical. Three of the biggest issues on the government agenda are localism, inclusion of SMEs and collaboration. Managed services frameworks may not be fully geared to support any of these agendas. In fact, in the context of procurement of complex services, they’re actually competing agendas.
In direct contrast with this, a DPS doesn’t restrict competition – and widening the competition breeds price reductions and quality increases. Localism can be encouraged and nurtured using a dynamic purchasing system and SMEs – and, indeed, micro businesses – aren’t excluded from competing for contracts. The day-to-day buying process of a DPS drives price and quality in a way that collective buying through a managed services framework doesn’t.
Finally, current government legislation such as the personalisation agenda (Putting Patients First and the 2010 White paper Liberating the NHS which moves to GP Consortia) is also placing far greater emphasis on non-procurement professionals taking on more responsibility for day-to-day purchasing decisions. For those ‘amateur’ buyers, a DPS is the answer.

Find out more: http://blog.supplymanagement.com/2011/12/procurement-set-for-its-own-format-war/

In a recent article from Supply Management (www.supplymanagement.com):

The challenge of getting indirect procurement right makes it “a sexy place to be” for procurement professionals.

This is the view of Rachael Stormonth, senior vice president at outsourcing analyst NelsonHall, who made her comments during a webinar hosted by procurement outsourcing provider buyingTeam.

The online presentation examined the results of a survey of 120 CFOs and CPOs. Only 47 per cent of those polled expressed high satisfaction with the management of indirect spend in their organisation.

With just 38 per cent of respondents rating the ability of buyers to influence buying behaviour highly, there is an opportunity to make a difference to the business. However, many companies are not taking advantage of this, spending too much time on transactional activities, and lacking the soft skills required to work with other functions.

She said: “The survey shows it’s an open door offered by CFOs who are expecting more from indirect procurement. [But] I hear of bright procurement graduates who are spending their days on low level tasks and are not getting engaged with business units.”

Other challenges highlighted included a lack of mandate because business units have primary responsibility for indirect categories, poor stakeholder engagement skills and lack the flexibility to purchase non-routine or specialised goods and services.

Some 60 per cent of CFOs were dissatisfied with the inability of buyers to influence the attitudes and behaviour of stakeholders.

Both groups of executives want to see greater interaction between indirect purchasers and business units. A way to improve this could be to get involved with projects at an earlier stage. “Indirect procurement must become a ‘trusted adviser’ to business units,” added Stormonth.

In a recent article from Supply Management (www.supplymanagement.com):

A 5 per cent reduction in indirect spend can translate to 1-3 per cent impact on the bottom line, reports the Everest Group.

The research firm published the findings in its report, Optimizing Indirect Spending, which addresses the importance of maximising savings opportunities from indirect spend.

Indirect procurement spend accounts for nearly 40 per cent of overall spend for a typical organisation. The group’s estimates found even a 5-10 per cent reduction in indirect spend can translate to a 1-3 per cent bottom line impact, which it describes as “significant under any economic context, let alone the tough current climate”.

The report highlights four different strategies for success – internal procurement, partial internally driven procurement, partial externally driven outsourcing or comprehensive outsourcing.

Everest said: “Comprehensive options offer greater value creation potential but are also more challenging to implement than partial options. It is important to look holistically at all the different options and analyse different scenarios before reaching a conclusion – the right first step is a precursor to future success.”

The report said choosing the internal procurement route involved centralising the indirect procurement function across business units and geographies and developing internal shared services.

Partial internally delivered outsourcing could involve internal sourcing, complemented by external staff and consultants. The report stressed the importance of implementing spend analytics, e-sourcing technology or procure-to-pay (P2P) technology, when choosing this route.

Partial externally driven outsourcing could involve outsourcing parts of P2P processes, such as day-to-day purchasing and catalogue management. It could also involve outsourcing parts of sourcing-focused activities such as spend data management, category management and vendor management.

The fourth strategy is a comprehensive outsourcing route where a third party delivers the procurement function for indirect categories.

Half of procurement managers admit their spend data is poor and they are unable to measure its quality – even though 95 per cent of the information is key to achieving their goals.

Buyers said the unsatisfactory data is a barrier to accurate and reliable purchasing processes and is hampering their ability to make savings, according the Spend Management survey published this week by DataFlux, which surveyed 110 UK procurement managers between June and August.
Although 95 per cent said data quality was crucial to achieving their procurement objectives, 50 per cent felt their data was of low quality or couldn’t measure its standard. “Having high-quality data to make procurement decisions is so fundamentally important that 50 per cent is a worrying figure,” said a DataFlux spokesman.

For the full article go to: http://www.supplymanagement.com/news/2011/poor-quality-data-hinders-procurement-savings-efforts/

Claritum have recently launched an upgrade to its powerful Catalogue capabilities. The Catalogue enables large numbers of users to quickly and easily order a range of products and services including standard and personalised items, print on demand and re-orders. Users can also use the Catalogue to request new customised items, receive prices and place orders.

Claritum’s Catalogue streamlines the processes involved in capturing orders, aggregating spend and automating order processing. The system allows clients to deploy branded catalogues to both internal and external customers but also to personalise the shopping experience to individual users. Dependent on the user permission and product profile, companies now have granular control over every order, globally and in real time.

Order processing can be fully or partially automated including auto-generation of work tickets for internal production or purchase orders for external fulfilment, generation of picking and delivery instructions, with complete audit trail and monitoring of key milestones throughout the process.

The recent upgrade provides more sophisticated content management functionality, increased levels of print personalisation, simpler ordering processes and automation of more of the fulfilment processes.

For more information, including a demo contact sales@claritum.com

Claritum exhibited at the Print Oasis Print Buyers Conference last week, which was held being held at the National Press Club in Washington DC and was  designed for print buyers to discover practical skills and new technologies that will help streamline the print production process and save money for your  their respective organizations. Attendees  were able to network with industry peers and benefit from their lessons learned as well as  learning about new solutions from exhibitors and speakers alike.

 
Print Oasis is the premier conference focused on the needs and challenges of print communications managers, print buyers, specifiers, and production professionals. Print buyers, designers, and marketers come together at this two-day conference and exhibition to learn about new and existing technologies and best practices for print production.

At the event Claritum CEO, James Samuels,introduced Claritum to the wider US audience, as well as outlining the use of technology to improve sourcing and procurement within the print category.

CEO James Samuels Addresses the Print Oasis Audience

 Samuels said “Increasingly print buyers are under pressure to not just demonstrate savings and efficiencies but are being asked to manage more and more categories of expenditure. Without the tools (such as Claritum’s Sourcing Pro) to evidence this optimized performance, CFOs and CPOs may consider outsourcing to a managed service provider. As Print buyers are now being asked to manage more categories of spend, the use of sourcing and procurement technologies can only aid this process”