I posted last year that one of my favorite books—and movies, too—is “A Christmas Carol,” Charles Dickens’ tale of Ebenezer Scrooge and redemption. That’s why an article last year on the Supply & Demand Chain Executive website caught my eye.
As you likely recall, Scrooge was visited by four spirits on Christmas Eve. The first being that of his former business partner, Jacob Marley, who had died seven years ago on that very night. But it's the other three spirits-the Ghost of Christmas Past, the Ghost of Christmas Present, and the Ghost of Christmas Yet to Come-that the article's author, Paul Martyn, relates to in the article.
When Scrooge was visited by the three Christmas spirits, he gained insight into his past actions and their impact on his life, and consequently realized the error of his ways. Martyn, a vice president at BravoSolution, contends that spend analysis can play the role of the Ghosts of Christmas Past and Present by allowing purchasing executives to examine and scrutinize their own and their supplier’s past and present performance, contracts, commitments and risks so they in turn can make better decisions in the future.
The place to start, just as it was for Scrooge, is by reviewing the past. Using spend and supplier analytics, purchasing executives are able to examine past purchasing performance. And by using both supplier and spend analytics enables them to determine what went poorly, what was acceptable and what went well.
Purchasing executives also need accurate, up-to-date information to support advanced analysis. This way, they can see the reality of today's transactions and commitments through numbers. That will allow them to determine, for instance, whether it's best to continue to put out fires and stay the current course or whether they should accept the-perhaps-bitter lessons and take corrective action. These can be tough decisions to make, Martyn says, but if executives have the facts and complete a thorough analysis, they will be more comfortable with the decisions they make.
Which leads us to future spending-or that which is Yet to Come. Spend analysis and sourcing provide a new "what-if" course of purchasing. Having analyzed past performance-both their own and that of their suppliers-purchasing executives have some decisions to make. That is, they have an opportunity to learn from the past and take a new, improved course for future decisions.
During the supplier-selection process, for instance, innovative companies look beyond a vendor's current capabilities, thinking about future capabilities and the anticipated cost to bring that capacity online, says Martyn. Using advanced optimization techniques, buying teams can quickly analyze the costs and benefits of making such an investment in a key supplier.
Martyn then asserts that by making a strong commitment to developing lasting collaborative relationships with the most strategic vendors, organizations can create the visibility and control necessary to be certain the necessary steps have been taken to reduce risk.
What do you think? Let me know if you make decisions by reviewing past actions and events. Of course, if you want to talk about Tiny Tim or a turkey as big as a young boy, that's fine too.
Happy Holidays, everyone.