Procurement Foundry Ask Me Anything with Fine Tune – ‘Cliff Notes’ Recap
Fine Tune CEO, Rich Ham, and Procurement Foundry President, Mike Cadieux, recently “chopped it up” (to steal a phrase from Mike) during an engaging Ask Me Anything session, “Tail Spend: You know you want to manage it, but you just don’t have the time….”
Drawing one of the largest audiences Mike has ever seen on LinkedIn, it is clear procurement professionals are concerned about key indirect expense areas and how to better “engage in the joust” with their suppliers.
For use as a “Cliff Notes” resource, we have documented a few of the better questions and their answers below.
Note: Answers have been paraphrased and, in some cases, expanded upon for clarity. Time stamps have been referenced for quick viewing of the original answers.
Q: Doesn’t a S2P solution put the purchases against the contract to provide transparency into contract spend? (6:37)
Theoretically, yes, but with more complex expenses—such as the kinds we deal with—the answer, in practice, is “no.” With complex indirect services, the landscape changes so rapidly and constantly, and there are so many little things that each industry’s suppliers are doing differently; those differences have ripple effects which cause the actual spend to bear less and less resemblance to the original contract over time. All of this conspires to render S2P solutions dramatically less useful in these complex indirect categories.
Q: What kind of data do you need to get off the ground for a proof-of-concept? (8:35)
We typically conduct a “shallow dive”—a surface-level discovery process focused on contracts and small samplings of invoicing—to make sure an initial cycle with us will bear fruit for the client. This is really more for the client’s peace of mind than for us, as we deal in cost savings percentages between 20%-50%. In large national accounts, there’s pretty much never a situation where we can’t produce meaningful savings. But a shallow perusal of contracts and invoicing usually gives us enough to know that we’re going to drive results. Then, when the engagement is formalized, we take a much deeper dive.
Q: I have a hard time justifying hiring a consultant to do what I was hired to do. How do you address that? (13:22)
Were you hired to perform tasks or were you hired to produce results? In any healthy organization, the implementation of strategies that produce optimal results is valued more than performing tasks and checking boxes. And with so many demands piled on lean procurement departments today, it’s hard to imagine how optimal results could be produced without the use of outside resources.
Q: When should the PF Community think about engaging in supplier transition, and does that change with particular categories? (42:15)
There is some variability by industry, but as a general and broad statement I would say one year out from contract expiration. I have seen way too many buyers get stuck because they decided to tackle a category three to six months out, and that complicates things. There are myriad ways you can lose leverage as you get closer to contract execution—and the suppliers know this.
Q: What can you give folks to take away one piece of advice? (47:45)
I don’t have one piece of advice; I have 30 or 40. If I have to narrow it down, I think the answer is that you have to figure out how to do the work of two to three people. But that doesn’t mean you have to work 80-hour weeks—there are resources out there to help you dramatically augment your in-house capabilities. In 2021, you need to be aware of—and strategically deploying—these resources in order to keep up and thrive.