An article from Industry Week released this week titled "Purchasing Officers: Confident Now, But is Trouble Ahead?", discusses the finding of a study conducted across 400 CPO's and purchasing directors of large organizations across 5 countries (United States, United Kingdom, France, Spain and Italy).

A key finding we picked up on was the ROI finding around Supplier Performance management.

"Of those purchasing professionals that have introduced new systems and processes to their supplier management strategy over the past 12-24 months, a large proportion report a clear return on investment within six months: 41% have made savings from greater supplier performance management, and 31% witnessed improvements from eSourcing tools and templates."

It seems that SPM is really delivering the goods under the current economic environment, where there is a strong emphasis on cost management.

Why???

My theory is that it is very hard to find any other "procurement/purchasing" process where there is such a high focus on action. Well designed SPM by it's very nature is focused on outcomes. So if these outcomes are clearly aligned with cost savings efforts, we can modify both our supplier and our behavior to meet those goals. With Strategic SPM we have the tools to figure out where we need to look (ratings and scores), as well as what to do when we find it (comments).

Author: Richard Benyon (Decideware)