Purchasing Insight

Purchase to Pay, Purchasing & Procurement Process, Electronic Invoicing

Browsing Posts published by Pete Loughlin

It’s not quite a revolution. No-one is fighting in the streets but the world is changing. For decades – indeed centuries, banks have wielded a power over business and the wider economy that was virtually unquestioned. The effect wasn’t always negative of course. It is hard to see how the economic growth of the 20th century could have happened without these institutions. But neither was it all good. There are anomalies in the way the economies of the western world operate  - there are unintended consequences, winners and losers. The fluctuations that occur in our economies are exploited by the banks who have a privileged central position and their actions can amplify the ups and downs in exchange rates, interest rates and stock prices. These accentuated aberrations can be very damaging to economies, businesses and individuals. But there is one aspect of the way our economies have run that hasn’t fluctuated and has always been pretty consistent – you never see a poor banker.

But now there’s a change in thinking. Some of the anomalies that we see – in particular the unfair playing field that exists between wealthy businesses and their smaller suppliers – are now being seen as unacceptable. Extending payment terms in order to optimize cash flow is a good thing only if you take a very isolationist view – if you see self-interest as the only thing that matters. If you take a wider view, you see that delayed payment hurts vulnerable suppliers, it pushes prices up and can damage an economy – at the very least it does nothing to help an economy that is on it’s knees and struggling to get back on its feet. This is why there’s been a change of thinking and ironically, it is the banks we can thank for the change. continue reading…

We’re in the middle of August and there are two unusual things about the summer in the UK. Firstly, we’re having one and secondly, we haven’t seen the scandalous use of purchasing cards in public sector exposed.

I’ve been looking out for the story that emerges every year about the £1 billion spending spree that public sector workers go on each year. Apparently, they use “state credit cards” to fund all manner of things like “taxi rides” and “business lunches”. Food from Marks and Spencer is often quoted as the disgraceful example of a waste of taxpayers money. Daily Mail readers from all over the UK are aghast: “Food from Marks and Spencer! I wish I could afford to feed myself at M&S.” continue reading…

No PO No Pay is often thought of a means to “train” suppliers providing them with a somewhat negative incentive to comply with their customer’s purchase to pay processes. “No PO No Pay No Exceptions” – I’ve said it myself – but in practice not only does it not work, it’s directing effort in the wrong direction. continue reading…

It’s reckoned that more than 50% of businesses employ between 2 and 5 people to prepare and create procurement dashboards and spend reports. This was revealed just recently as an output to some research performed by Rosslyn Analytics but it will come as no surprise to many procurement professionals. And it’s not just the excessive time and resource that is dedicated to the collation of the numbers that is problematic, the accuracy of these dashboards and reports is often appalling. continue reading…

One of the key reasons to implement tight controls within purchase to pay is to ensure that people can’t steal. But when I talk to businesses about the need to mitigate against the risk of fraud in finance departments – about how it’s possible for staff to collude with suppliers or to falsify information for personal gain – I hear this response again and again: “But who would do that?”

What they’re actually saying is: “We’re all trustworthy here. I don’t know anyone that would do such a thing.” But regrettably,  the truth is a little different. The reality is that there are only two types of people – those that cheat and those that cheat more. continue reading…

I have a great deal of respect for Gartner and pay close attention to their insights and futurology. Despite that, I get a great sense of satisfaction on the occasions when I see what’s what before them.

It’s not news to me that Nipendo are cool but it’s great to see their coolness recognized by a firm as august as Gartner. Nipendo have been named as a “Cool Vendor” in Gartner’s new report “Cool Vendors in Integration, 2014” by Keith Guttridge, Massimo Pezzini, Paolo Malinverno & Jess Thompson. It means that, in the authors’ opinion, Nipendo are “Innovative, Impactful and Intriguing”. continue reading…

The 2014 Hackett Key Issues report on procurement priorities reveals some interesting trends and it’s backed up with some highly insightful statistics and analysis. The headline issue is the most interesting. The report shows that cost saving, as a driver for procurement, is diminishing in importance compared to a more strategic agenda. That might be news to some but it confirms what many of us have known for some time.

For a more in depth insight on the report, I spoke to David Rennie in London, European Practice Leader, Procurement & Supply Chain Transformation at The Hackett Group and he explained some of the findings in the report.

Hackett’s survey shows that cost saving ranks a mere 4th in the priority list for procurement. Upstaged by the need to expand influence and the need to innovate, cost saving is a relatively minor priority.

Hackett Chart

 

The report reflects a maturity of thinking in the procurement profession and moreover it shows that procurement is falling in line with broader commercial objectives of business.

Pete Loughlin can be found on twitter @peteloughlin