Among the multitude of challenges the COVID pandemic has inflicted on businesses, the heightened requirement to straddle the precarious divide between prudency with operational budgets on one side and not throwing the return-on-investment baby out with the expenditure bathwater on the other represents a particularly painful headache.
In a landmark 1983 article in the Harvard Business Review, Peter Kraljic introduced a purchasing portfolio model using a 2 x 2 matrix. The Kraljic model was based on the premise that purchased products and services can vary significantly in terms of importance and risk. Based on this, procurement professionals should use different sourcing and supplier management strategies depending on the importance and risk profile of each purchase.
It is no secret that poor supplier data is the single largest barrier facing successful eProcurement transformation. Organizations in all industries, regardless of size, are susceptible to massive budget overruns or outright project failure without a well-thought-out data acquisition strategy.
Imagine a scenario where a zealous sourcing manager at a Fortune 100 company is in negotiations with a new middle-market regional landscaping services provider. The negotiation is for a seven-figure annual landscaping and maintenance contract at their regional corporate park.
In ‘The Fog’ ("Mad Men" Season 5, Episode 3), SCDP’s creative director, Don Draper, delivers a memorable line for today’s procurement managers and professionals. After being endlessly nagged over the waste of office supplies, alcohol and time by the company's CFO, Lane Price, Draper levels this profound declaration:
"You came here because we do this better than you. And part of that is letting our creatives be unproductive until they are."