The Revolving Door of Corporate Procurement & Resulting Bottom-Line Vulnerabilities: Part I
- We founded Fine Tune in a basement in Bloomington, IN in 2002. On June 30th, we’ll have our first 15-year client, a global industrial/chemical conglomerate. As we closed in on this anniversary, we decided to consult our records to answer the following question: Between the corporate procurement and accounting departments and 50 manufacturing plants throughout the US and Canada, how many contacts have we served over the last 15 years? The answer was nearly 200, which was about what we figured it would be, assuming relatively normal employee turnover rates.
- In early 2020, we were introduced to our fourth corporate-level contact in the course of the 3-year relationship with a global medical device manufacturer. Field-level contacts are, of course, revolving constantly.
- Our sales team started pursuing a multibillion dollar metals company in 2013. It took us five years to finally make them a client. During that extended sales cycle alone, the contact turned over four times. In the 20 months since they became our client, the contact has turned over twice more.
- At an international food processor, we’ve worked with 6 contacts over a 3-year relationship.
Of course, there’s nothing unusual about any of this.
Employee turnover is an inconvenient but unavoidable reality of corporate life.
When it comes to expense management, though, turnover events are moments of acute vulnerability. This is particularly so in certain complex tail spend categories, where even a seasoned buyer who has owned the same bucket of expenses for a decade tends to have only surface-level understanding of these categories. When turnover events happen every 2-3 years (or more), the vulnerability is a nearly constant reality.
As procurement departments have leaned out since the Great Recession, more and more businesses have implemented strategies for augmenting in-house resources, particularly in lower-priority categories. As you consider outsourced expense management strategies, it is a natural temptation to focus on short-term, hard-dollar impact. And of course, this is a critical consideration. But part of your decision process absolutely should entail some examination of whether the strategies you’re considering would also offer greater long-term continuity than you’re able to achieve, in-house—and if so, what value that long-term continuity might represent. In complex tail spend categories, the answer is likely “quite a bit more than you think.”
In the next installments within this series (Part II) (Part III), we’ll take a dive into a few of the scenarios described above, highlighting the vulnerabilities turnover events tend to cause and how to avoid the inherent pitfalls and create lasting value for your organization.