One of my favorite books—and movies, too—is “A Christmas Carol,” Charles Dickens’ tale of Ebenezer Scrooge and redemption.
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 generally get most attention.
All of us can learn from Scrooge’s night, and can take stock—both professionally and personally—of what has been done, what is being done, and what will be done. These lessons can apply to most any supply chain discipline. So, for example, spend analysis can play the role of the Ghosts of Christmas Past and Present because purchasing executives can 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. That enables them to determine what went poorly, what was acceptable and—hopefully—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 tackling one crisis at a time or whether they should move to take corrective action. Admittedly, there can be some tough decisions to make. However, if executives have the facts and complete a thorough analysis, they will ultimately be more comfortable with the decisions they make.
That leads to future spending, or, for Scrooge, that which is Yet to Come. Spend analysis and sourcing provide a “what-if” course for purchasing. When purchasing executives have knowledge about the analysis of past performance—both their own and that of their suppliers—they can make better-informed decisions. 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. Using advanced optimization techniques, buying teams can quickly analyze the costs and benefits of making such an investment in a key supplier. 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 needed steps have been taken to reduce risk.
What do you think? Let me know how important you think it is to base key decisions by reviewing past actions and events. If you’d rather talk about Tiny Tim or a turkey as big as a young boy, that’s fine with me too.
Happy Holidays, everyone.