Managing Indirect Spend: Enhancing Profitability through Strategic Sourcing (Wiley Corporate F&A)

303 Pages·2021·3.876 MB·English

by  Joe Payne, William R. Dorn, David Pastore, Jennifer Ulrich

TrimSize:7inx10in (cid:2) Payne762348 ffirs01.tex V1-04/21/2021 7:34am Pagei
Managing Indirect Spend
(cid:2) (cid:2)
(cid:2)
TrimSize:7inx10in (cid:2) Payne762348 ffirs01.tex V1-04/21/2021 7:34am Pageii
Foundedin1807,JohnWiley&SonsistheoldestindependentpublishingcompanyintheUnited
States.WithofficesinNorthAmerica,Europe,Asia,andAustralia,Wileyisgloballycommitted
todevelopingandmarketingprintandelectronicproductsandservicesforourcustomers’pro-
fessionalandpersonalknowledgeandunderstanding.
TheWileyCorporateF&Aseriesprovidesinformation,tools,andinsightstocorporatepro-
fessionalsresponsibleforissuesaffectingtheprofitabilityoftheircompany,fromaccountingand
financetointernalcontrolsandperformancemanagement.
(cid:2) (cid:2)
(cid:2)

TrimSize:7inx10in (cid:2) Payne762348 ffirs01.tex V1-04/21/2021 7:34am Pageiii
Managing Indirect Spend
Enhancing Profitability Through
Strategic Sourcing
Second Edition
(cid:2) (cid:2)
JOE PAYNE
WILLIAM R. DORN
DAVID PASTORE
JENNIFER ULRICH
(cid:2)
TrimSize:7inx10in (cid:2) Payne762348 ffirs01.tex V1-04/21/2021 7:34am Pageiv
Copyright©2021byJohnWiley&Sons,Inc.Allrightsreserved.
PublishedbyJohnWiley&Sons,Inc.,Hoboken,NewJersey.
PublishedsimultaneouslyinCanada.
Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmittedinanyformor
byanymeans,electronic,mechanical,photocopying,recording,scanning,orotherwise,exceptas
permittedunderSection107or108ofthe1976UnitedStatesCopyrightAct,withouteithertheprior
writtenpermissionofthePublisher,orauthorizationthroughpaymentoftheappropriateper-copyfeeto
theCopyrightClearanceCenter,Inc.,222RosewoodDrive,Danvers,MA01923,[phone],fax
[phone],orontheWebatwww.copyright.com.RequeststothePublisherforpermissionshould
beaddressedtothePermissionsDepartment,JohnWiley&Sons,Inc.,111RiverStreet,Hoboken,NJ
07030,[phone],fax[phone],oronlineatwww.wiley.com/go/permissions.
LimitofLiability/DisclaimerofWarranty:Whilethepublisherandauthorhaveusedtheirbesteffortsin
preparingthisbook,theymakenorepresentationsorwarrantieswithrespecttotheaccuracyor
completenessofthecontentsofthisbookandspecificallydisclaimanyimpliedwarrantiesof
merchantabilityorfitnessforaparticularpurpose.Nowarrantymaybecreatedorextendedbysales
representativesorwrittensalesmaterials.Theadviceandstrategiescontainedhereinmaynotbesuitable
foryoursituation.Youshouldconsultwithaprofessionalwhereappropriate.Neitherthepublishernor
authorshallbeliableforanylossofprofitoranyothercommercialdamages,includingbutnotlimitedto
special,incidental,consequential,orotherdamages.
Forgeneralinformationonourotherproductsandservicesorfortechnicalsupport,pleasecontactour
CustomerCareDepartmentwithintheUnitedStatesat(800)762-2974,outsidetheUnitedStatesat
[phone],orfax(317)572-4002.
Wileypublishesinavarietyofprintandelectronicformatsandbyprint-on-demand.Somematerial
(cid:2) (cid:2)
includedwithstandardprintversionsofthisbookmaynotbeincludedine-booksorinprint-on-demand.
IfthisbookreferstomediasuchasaCDorDVDthatisnotincludedintheversionyoupurchased,youmay
downloadthismaterialathttp://booksupport.wiley.com.FormoreinformationaboutWileyproducts,
visitwww.wiley.com.
LibraryofCongressCataloging-in-PublicationDataisAvailable:
ISBN9781119762348(hardback)
ISBN9781119762492(epdf)
ISBN9781119762362(epub)
CoverDesign:Wiley
CoverImage:©AerialPerspectiveWorks/E+/GettyImages
10987654321
(cid:2)
TrimSize:7inx10in (cid:2) Payne762348 ffirs01.tex V1-04/21/2021 7:34am Pagev
ManagingIndirectSpendisandalwayswillbededicatedtoAbrahamPodolakandStevenBelli.
Withoutyourperseverance,vision,andenthusiasm,thesepageswouldsurelynothavebeenwritten.
Yourjointleadership,guidance,andcompassionbuiltauniquecompanythatchanged
allourlivesforever.
(cid:2) (cid:2)
(cid:2)
TrimSize:7inx10in (cid:2) Payne762348 ftoc.tex V1-04/16/2021 3:30pm Pagevii
Contents
Preface xiii
Acknowledgments xvii
AbouttheAuthors xix
PARTI: THE PROCESS
Chapter1:AnIntroductiontoStrategicSourcing 3
Visibility 4
Objectivity 4
ProjectManagementTool 5
InSummary 7
(cid:2) (cid:2)
Chapter2:DataCollectionandSpendAnalysis 9
WhatIsDataCollection? 9
WheretoStart? 10
DealingwithDecentralizedDataSets 12
SpendAnalysis 13
SpendAnalysisTools 17
KickingOfftheProjects 18
End-UserInterviews 18
Line-ItemDetailandGettingtheMostfromYourSupplyBase 21
SupplierInterviews 24
AnalyzingContractsandPricingAgreements 26
TheFinalAnalysis:BuildingaBaseline 29
InSummary 31
Chapter3:ConductingResearch 33
TypesofCost-SavingsOpportunities 33
UnderstandingtheCategory 34
IdentifyingSuppliers 35
UnderstandingtheSupplyChain 35
UnderstandingCurrentMarketConditions 38
UnderstandingtheFactorsofCost 38
vii
(cid:2)
TrimSize:7inx10in (cid:2) Payne762348 ftoc.tex V1-04/16/2021 3:30pm Pageviii
◾
viii Contents
ReviewofTechnologies,Processes,Products,andServices 38
CollectingMarketIntelligenceThroughtheRFIProcess 41
InSummary 44
Chapter4:TheRFxProcess 45
UsingtheRFItoBegintheSourcingPhase 45
DevelopingYourSourcingStrategy 46
GoingtoMarket 49
GeneratingtheRFPandRFQ 50
SupplierSelectionandScorecardCriteria 58
AdministeringtheRFxprocess 58
ReverseAuctions 60
AlternativestotheRFx—TheImportanceofFlexibilityandCreativity
intheSourcingProcess 62
InSummary 62
Chapter5:ScorecardingSuppliers 65
MeasuringValue:DevelopingSelectionCriteria 66
TheQuantitativeAnalysis:EvaluatingtheBidPortionofSupplierProposals 67
TheQualitativeApproach:DevelopingtheRFPMatrix 68
References 71
TeamworkandObjectivity 72
(cid:2) Technology’sRole 73 (cid:2)
InSummary 74
Chapter6:Negotiations 75
KnowingWhattoNegotiate 76
NegotiationOptimization:DevelopingFinalTargets 81
Gettingto“No” 83
WhatNottoDo 85
InSummary 87
Chapter7:GetItinWriting 89
EssentialComponentsofaContract 89
Attachments 96
ContractManagement 99
MakingtheBestUseofYourLegalTeam 100
ContractingPitfallsandLanguagetoAvoid 101
WorkingOutsideofaContract:PricingAgreementsandHandshakes 104
InSummary 104
Chapter8:ImplementationandContinuousImprovement 105
TheChallengesofImplementation 106
OvercomingChallenges 108
(cid:2)
TrimSize:7inx10in (cid:2) Payne762348 ftoc.tex V1-04/16/2021 3:30pm Pageix
◾
Contents ix
MonitoringImprovementsAfterImplementation 110
SavingsandComplianceBestPractices 115
ContinuousImprovementInitiatives 115
InSummary 119
Chapter9:WhatNottoDoDuringaStrategicSourcingInitiative 121
CreatingOverlyComplexorLongRFPs 121
LettingtheSupplierWritetheRFPforYou 122
RFPSpam 125
InSummary 130
PARTII: THE TOOLS
Chapter10:TheImportanceofMarketIntelligence 133
TheTypesofMarketIntelligence 134
ComponentsofSuccess 136
BreakingDowntheComponents 142
InSummary 143
Chapter11:IntroductiontoProcurementTechnology 145
ABriefHistoryofProcurementTechnology 145
(cid:2) TheSolutionLandscape 146 (cid:2)
UpstreamandDownstreamProcurement 147
SpendAnalysis 147
Sourcing 150
ReverseAuctions 152
ContractLifecycleManagement(CLM) 153
SupplierInformationManagement(SIM) 154
SupplierPerformanceManagement(SPM) 155
SupplierRiskManagement(SRM) 155
Procurement(P2P) 155
InvoicingandPayment 157
S2PIndividualProductsVersusFull-SuiteSolutions 159
InSummary 161
Chapter12:IncreasingStakeholderandSupplierEngagement 163
WhatIsaStakeholder? 163
WhoAretheStakeholders? 165
TheValueBroughtbyStakeholders 168
InSummary 171
Chapter13:LeveragingGroupPurchasingOrganizations 173
TypesofGPOs 174
ServicesProvidedbyGPOs 174
(cid:2)