Large Image With Sidebar

How much does it cost to implement purchase to pay best practice? Having spoken to many senior finance and procurement people, I get the impression that many of them think more about how much they can save by ignoring it. Sure, they value the basics but the whole nine yards is seen as an expensive luxury. So how much does best practice cost to implement? How long is a piece of string? It depends of course on the size and scale of the organization and it may be better to ask an alternative question: How much does it cost not to implement best practice? There’s some really interesting research that’s just been published by OB10 that can help answer that question.

I won’t lie. When I first started Purchasing Insight in 2009 I didn’t know what it was. The motivation was personal and the mission was straight forward. I wanted to set up a pure play internet business that was built on a social media platform. Initially, I had no idea what the business model would be but I was driven by a gut instinct and an intuition educated by nearly 20 years in B2B internet technologies. My instinct proved to be sound and increasingly people within the procurement community are understanding the importance of social media as professional tools and vendors are becoming more savvy about employing social media in their marketing mix.

Everyone knows that times are tough and times are toughest for small businesses. They're faced with obstacles that can seem insurmountable - paperwork, regulation working capital costs. But there's one obstacle above all others that can strike fear into the every small business - the late payer. They are a scourge. Over years, an obsession with the optimisation of DPO (that's accountant-speak for funding your business at the expense of your smaller, weaker suppliers) has become a central financial strategy for many large organisations. Some of the biggest household names in the UK were recently outed for extending their payment terms to an astonishing 180 days and there is an increased awareness among the public and politicians that this practice is grossly unfair.

It is depressing that whenever there is conflict brewing  somewhere in the world – a political or diplomatic tension that escalates to point where otherwise peaceful countries contemplate military action - there’s always someone, somewhere who says “Nuke ‘em”. The Nuke option – the answer proposed by the person that doesn’t understand the question. Instead of solving the problem, they want to destroy the problem – that way, they don’t have to worry about how to solve it. It’s not just war of course. There are circumstances in business that present hugely complex issues when it can be tempting to reach for the red button. A few years ago I provided some consultancy support to a construction company. When I began working for this particular client, they were just recovering from the consequences of pressing the red button. They had implemented a Purchasing Card program.

Jason Busch wrote recently about a piece that Phil Fersht wrote about Forbes magazine. Although I'd encourage you to read both pieces in summary, they both lamented the lowering standards of Forbes magazine for, apparently, allowing their sponsors, such as SAP and Oracle, to write advertorial content in the guise of objective journalistic commentary. Pro bloggers would never do that would they?

I'm old enough to remember the pioneering days of the internet and the growth in the use of internet technologies in the B2B landscape and about 18 months ago, I caught up with an old friend and erstwhile colleague, Mike Zealley, who I worked with during those exciting times. We spent a lunch time recalling the predictions we made in the late 1990s about what could be done, what was possible and how different the world would be. The disillusionment of the dot com crash may have taken the sparkle off but today, many of the things that we predicted have come to fruition - some in an uncannily accurate way. So it was it was uncanny last week when I went to visit Oxygen Finance in London that the first thing Roberto Moretti, their European CEO, said to me was “Mike Zealley sends his regards.” The second thing he said to me was “Pete, let me introduce you to Mark Hoffman”.

Insights in your inbox

FREE Purchasing Insight Newsletter

Insights in your inbox

You have Successfully Subscribed!