Up to £2million of goods were recently stolen in a scam by fraudsters posing as McDonalds buyers. Items including laptops, TV’s and computers were targeted with credit periods obtained between 30 and 90 days.

The goods were delivered to an address in Manchester, but were never paid for. Greater Manchester Police Authority issued warnings to businesses to stay on alert as it is thought the fraudsters are now using the same scam to obtain foods, wines and spirits.

The process automation that class-leading, on demand purchase-to-pay systems can offer, coupled with integrated supplier portals, provides a secure platform whereby buyers can effectively manage their supply-chain with the assurance of compliance and control throughout all standard processes including credit checks, finalising terms of business and other legalities.

This does not however protect the supplier, who when receiving a new buyer request from what appears to be a reputable organisation, should still develop that all important supplier/buyer relationship and carry out all their necessary checks.

With the state of the US economy understandably taking centre stage in the ‘honeymoon’ period of his presidency, Barack Obama and his team are looking for money wherever they can find it, and first in the firing line are the contracts made within public procurement practices. Having already highlighted a potential $40billion annual saving, Obama has called a review of government spending and contracting.

It’s an exercise, albeit on typically a rather smaller scale, that is being replicated in many organisations where the focus on spend and contract management has been allowed to soften while the good times were rolling. 

And it brings the need for adequate processes and systems very much to the fore. We have seen the floodgates open recently in terms of the number of organisations looking to generate rapid savings through sourcing, and we have been able to help contribute to over £10m of savings in the UK alone since the start of the year on behalf of our sourcing clients. But what must not be forgotten is the need to invest in the internal systems that then ensure those paper savings are translated into real bottom-line reduction by controlling purchasing behaviour across the enterprise.

Following on from our recent post about the relationships with suppliers, it was interesting to see in the press that both M&S and Department of Work and Pensions are looking at contract renegotiations with key suppliers.  

Many contracts agreed before the economic downturn are beginning to cause concern for procurement teams, even more so with a weak sterling to consider when negotiating with suppliers outside of the UK.  

Contract renegotiations will be a key exercise for many procurement professionals throughout the year, and not an easy one at that. If contracts cannot be negotiated, this leaves only a few choices; pass on price increases to consumers, make cost cuts elsewhere or drop product lines altogether, as highlighted recently when Belgium Supermarket Delhaize delisted over 250 Unilever products after refusing to meet price increases for product promotion. 

In an interesting move to tackle the challenges ahead, BMW and Daimler have recently come together to take advantage of economies of scale by jointly purchasing electronics. As demonstrated by these two automotive giants, perhaps now is the time to make some otherwise unthought-of strategies - is there a better way to approach your contract negotiations? What could you offer your suppliers in exchange? After-all, it is a two-way street.

SAP has finally disclosed the date of its next eSourcing release cycle as Q3 2009, when it intends to deliver better usability (shouldn’t be too hard!), support for complex pricing structures and finally to release dutch auction capability. 

After this, don’t expect any major improvements until well into 2010 – always assuming that SAP sticks to its own roadmap – when a further release will focus on coupling process integration between eSourcing and the overall Business Suite. 

For the next general release, SAP users out there will have to wait until at least 2011 when SAP, with more functional enhancements including the tight integration of SAP PLM and SAP SCM as well as industry specific business processes.  

The big issue for purchasing teams looking to (or saddled with) SAP isn’t really addressed by any of this however. Namely, whether the various SAP modules that compete in this space – such as SAP eSourcing and SAP sourcing within the SRM module – are ever going to be truly integrated and free of overlapping functionality. How SAP eSourcing users (and data) will interact with the sourcing capabilities resident in SAP SRM, especially the complex operational sourcing and bidding capabilities SAP SRM 7.0 remains an unanswered question. 

Could be time to look elsewhere?

A recent survey by Supply Management magazine suggests that nearly three quarters of buyers are looking to make cuts to their vendor list and use fewer suppliers.

77 of the 100 buyers surveyed said consolidation would make the supply base more manageable and cost-effective, and while there is no doubt this is true it beholds organisations to make sure they don’t simply take a knife to the vendor list without careful analysis of the risks involved. Supplier rationalization efforts can increase supply risk as well by limiting a company's options and back-up plans if a disruption, quality issue or supplier bankruptcy occurs.

A clear and accurate picture across the supply chain is an essential pre-requisite, which is of course where purchase to pay systems play a significant part, but category expertise can be equally important and companies considering supplier rationalisation should draw heavily on the experience of their eProcurement vendors or advisers.  

The rise and rise of raw material costs around the world are creating waves even among European companies whose purchasing power is bolstered by a strong Euro. Henkel KGaG, the German maker of Persil detergent, is blaming commodity price rises for plans to shed up to 3,000 jobs, or nearly 6% of its total workforce.

In the UK, with less in the way of currency protection, making savings across organisations is becoming the only conversation business wants to have – nobody wants job cuts, which puts the spotlight on purchasing practices and driving efficiencies in the supply chain.

We’re often asked to help purchasing and finance professionals develop the business case for on-demand eProcurement, in the face of a corporate directive that the ERP system should be used wherever possible.

As a result we wrote a white paper that covers the ‘7 Key Considerations’ to take into account when making this decision, but those considerations aside the main driver that we find is that buyers and users simply aren’t interested in where the solution sits – whether in the ERP system or not – just so long as it delivers. And, perversely, that’s why they are looking to on-demand.

Long experience of delays, high cost and poor usability make the online alternative – where complex purchasing systems can be delivered quickly, cost-effectively and with the emphasis on intuitive use – the clear choice for the actual system users, rather than the guardians of the ERP system.

If you’d like to read more on this, please request white paper that specifically addresses the pros and cons of on-demand vs ERP – register here and we’ll send it out to you.

In the face of what appears to be an overwhelming consensus of opinion that we are in for a tough year economically, it’s always worth bearing in mind that leaner pickings tend to favour fitter businesses and as such a ‘slowdown’ – whilst curtailing overall market growth – offers no end of opportunities to pick up market share for those businesses fit and able to weather a storm. 

It also means broadening the focus of the business. Too many companies have an all-consuming thirst for profit growth through sales that ignores other, often much more accessible, ways to drive up the bottom line. That can all change in a tightening market and it’s when technologies and techniques such as electronic sourcing and eProcurement really come into their own.

After all, cutting costs – both directly through lowering the price of bought-in goods and services and through process efficiencies – delivers an increase to the profit line in direct relation to the savings made. And since, both in our experience and according to the latest Aberdeen Report, ”enterprises that adopt eProcurement reduce their requisition-to-order cost by approximately 48%, and negotiate, on average, a 4.75% incremental discount with suppliers”, there is plenty there for the taking. 

So Happy New Year and best wishes for a prosperous 2008!