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The Value of Good Data to Procurement

Often the first thing that comes to mind when discussing data in broad terms in scientific research. You may recall back in high school or college the importance of collecting quality data and different statistical sampling techniques as the basis for your research. In business data is typically associated with sales numbers or profitibility. Going a little deeper, procurement relies heavily on data to make dterminations as to vendors, sourcing, and what changes and adjustments need to be made. The challenge is usually either a shortage of data or an abundance of data and no good way to sort and use it.

The infographic below by MasterCard company, trueaxis, shows how organizations with advanced software (like Bellwether’s ePMX:) successfully utilize the data to the tune of over 33% more revenue growth and 12 times the profit growth.

datainfographic

November 25, 2014
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BY Bellwether
Purchase Power Parity for Procurement

Formula Math

In a global economy sourcing often stretches across borders and even oceans for purchasing managers. Factors involved can be very complex. One thing purchasing managers need to consider is purchase power parity. According to investopedia.com purchase power parity can be defined as follows: “An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency’s purchasing power.”

Still confused? Let’s look at an example. Let’s say you are sourcing Widgets and looking at a vendor here in the United States and one in Europe. The exchange rate is only one factor in comparing the cost of Widgets from both countries. The formula for purchase power parity is P1 / P2 where P1 is the price of the widget in one currency and P2 is the price in another currency.

The purchasing manager conducts research and finds that the cost per widget here in the United States is $.62. The cost for the European vendor is $.45 Euros. Using our formula: 0.62 / 0.45 = 1.38. The exchange rate at the time of this post is 1 Euro equals 1.35 US Dollars. The purchase power ratio of 1.38 and an exchange of $1.35 per Euro indicates that the purchasing power of the dollar and Euro are almost the same. Not exact, but very close. The ratio held true across multiple products then you could say that consumers in Europe have similar purchasing power to US consumers with respect to each using their own currency in their own country. However, if exchange rate increased to 2 US dollars to 1 Euro, but the purchase power parity remained at 1.38 then this would show a loss of purchasing power for US consumers.

As you can see, there is quite a bit to consider when sourcing from countries outside of your own with differing currencies and exchange rates. Your end user/consumer will have to have the ability to purchase the finished product so not only does the purchasing manager and business owner have to consider price, exchange rates and purchase power parity for sourcing, but those factors have to be considered again at the point of sale.

November 20, 2014
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BY Bellwether
Social Networks for Procurement Professionals

A couple of weeks ago we discussed using Facebook as a Procurement Professional in this blog post here. Since that time we’ve discovered a couple of new social networks geared specifically toward this industry instead of trying to find a use in an existing social network. As technology continues to develop and purchasing and procurement professionals become more mobile needs change and gaps arise. Facebook and LinkedIn may be too broad for those in the purchasing industry. That’s where Procurious and CorporateBrainz feel they have their place in our technology-laiden world.  Let’s take a brief look at both.

Procurious

http://www.procurious.com/

From their website…

So we’ve built Procurious – an online business network for a new generation of procurement professionals. It’s a hub for them to advance their career, develop skills and expand their professional network. Procurious is unique as it bridges the gap between networking, thought leadership and technical information – no other online platform can do all three.

Procurious has been developed for current and future generations of ‘Procurers’, by a group of seasoned procurement professionals who understand the business. We know procurement professionals all face similar challenges, so we’re making their lives easier by combining a professional network, learning and career centre in one online hub.

We believe procurement has an image problem with outdated stereotypes and it’s time procurement professionals joined forces to become more collectively valued. By empowering our future leaders, we aim to change the face of the procurement profession from the inside out.

CorporateBrainz

http://corporatebrainz.com/

From their website:

CorporateBrainz was set-up by a group of procurement and supplier management professionals to create an inclusive community where questions can be asked and answers, best practices and new ideas can be shared.

Right now, CorporateBrainz is the only online specialist community for procurement professionals from every industry sector.

Additionally, a unique marketplace has been created allowing companies and employers without dedicated procurement and supplier management resources to tap into these skills on a project-by-project basis.

Are you currently using either of these social networks? Which is your favorite?

November 18, 2014
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BY Bellwether
5 Minute Case Study on Short-term procurement fixes & long-term gains

ProcureCon TV screens exclusive interviews with Europe’s leading procurement professionals. They go behind the scenes at major industry events to bring the very latest news, views and insight from the procurement sector.

In this 5-minute video case study with Edward Gardner, Director Supply Chain Procurement at Rexam, he describes the balancing act required to keep management happy with short-term wins while simultaneously working toward a strategic long-term plan that will have more benefits down the road a bit.

 

November 13, 2014
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BY Bellwether
Alternative Financing with the Help of your Purchasing Department

The ebb and flow of business means that sometimes a traditional loan is not the best solution for an increase in captial. Maybe your business cannot qualify or maybe they do not have the time to go through the entire approval process; when opportunity presents itself quick action is sometimes necessary. Alternative financing options may include account receivable or purchase order financing. This infographic by Lendio contrasts the differences between AR and PO financing and should help you decide if either is a viable option for your small business.

ARPOFinancing-e1318969596983

November 11, 2014
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BY Bellwether
Do You Use Facebook in your Procurement Job?



Facebook is arguably one of the largest and most popular social media networks, but as far as business goes, it isn’t usually the first to come to mind. Professionals tend to think of LinkedIn as a social network that can help you professionally. Drilling down further into the purchasing profession, where does Facebook fit? Do you use it for business?

Big businesses and small businesses both utilize Facebook for branding. Some very small business even use Facebook as their online presence instead of a professionally created website. Facebook will help provide the ideal environment for marketers and advertisers so that they are able to share and spread ideas socially. In this way Facebook is able to utilize its viral campaigns so that the public is persuaded to spread and share the advertisers’ message amongst their colleagues and thereby carrying out the job of marketers.

Video clips offer the most popular samples of viral campaigns and provide numerous videos which everyone with internet access can view at some point. Creating a funny video campaign that is shared on social media does not have the large price tag of buying air time on popular TV programming.

Facebook is also able to provide several services for marketing. These include the ability to create groups and social events with the intention of inviting members to become a part of the group. Facebook also provides the option for persons to become fans.

But all of these advantages tend to apply more to businesses whose audience and target market is the general public. Companies like Coca-Cola who want to build brand loyalty across multiple platforms and whose fans are passionate about their product.

Businesses who market to other business – suppliers, vendors, purchasing managers – what benefit does Facebook have to each of them? What about the paper company who sells to other businesses? They don’t deal with the type of customer that Coca-Cola has. Instead of millions of potential customers they have a much smaller pool of target customers.

Networking is one of the highest benefits of Facebook for procurement professionals. Facebook has three primary setups – the personal profile that individuals use, pages that businesses, charities, and other organizations use, and groups created around common themes and interests. Procurement professionals may find pages created by suppliers that they could follow to get the most current information if the page is actively managed and updated. But groups created by and for procurement professionals may be the best use of Facebook for you. As an example, there is a group called Procurement Professionals (https://www.facebook.com/groups/procurementprofess/). This is an Open Group, which means anyone can join, and at the time of this posting has roughly 600 members. The group description reads:

“This group was created to help all procurement expert to share ideas, get news and discuss critical issue concerning procurement and supplies profession. You are all welcome ,don’t hesitate to ask, add, criticize for the success of this group.”

There are other groups, some smaller, some closed where you need to ask permission and get approval to join. Joining one or more of these groups, getting to know others in your profession around the country and world can prove to be quite beneficial and lead to other opportunities, sources, and avenues of conducting your business.

November 6, 2014
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BY Bellwether
Understanding Supply Chain Diversity

ProcureCon TV screens exclusive interviews with Europe’s leading procurement professionals. They go behind the scenes at major industry events to bring the very latest news, views and insight from the procurement sector.

Here is a 2013 interview with Jonathan Sutherland, head of procurement at Royal Bank of Scotland. In this intereview he answers the questions:

What is supply chain diversity?

How can you implement supply chain diversity?

What benefits will it have on your business?

Purchasing and procurement is becoming more integrated into the strategic planning portion of businesses. It is no longer just about ordering copier paper and pens. The complexity and strategy involved will make the unititated’s eyes glaze over. Supply chain diversity is one aspect of a complete strategic plan that you should consider incorporating into the purchasing department of your business.

November 4, 2014
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BY Bellwether

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