That’s right I’m going there. Like ‘Big Data’ and ‘Cloud Computing’ before it, the phrase ‘Value Beyond Savings’ is all the buzz at the moment.
In an ode to buzzwords the world over, in 2013 Dan Airley of Duke University gave us this.
Allow me update for a 2016 procurement audience.
Can we even define it?
Perhaps the biggest distraction and hindrance to procurement teams actually delivering value beyond cost savings is the misuse of the term. It seems that anyone pushing anything in the procurement space, from consulting to tech uses the phrase ‘value beyond savings’ to spruik their wares, often with no link to any value whatsoever. This narrative becomes particularly amusing when used by firms whose sole purpose is to deliver or record cost savings.
As interesting as some of the positioning and marketing may be, I feel that the ‘value beyond savings’ message has been hugely diluted by this marketing speak and this comes at a great cost to our function.
So with this in mind I have compiled the following overview that should help sort the wheat from the chaff when it comes to understanding and delivering on ‘value beyond savings’.
What Value Beyond Savings ‘is Not’.
- Replacing the words ‘cost savings’ with the word ‘value’.
- Allowing suppliers to submit invoices in a new way.
- Finding new information to use against suppliers.
- Find new ways to lengthen payment terms.
- A process solely driven by procurement.
- A language that only Procurement speaks and understands.
- A label used to hide another agenda.
- Getting suppliers to do the same things for less.
- New pressure tactics used to extract savings
- Easy to achieve…
What Value Beyond Savings ‘is’.
- Procurement working to achieve corporate objectives
- Understanding that innovations will come from the supply chain and working toward leveraging this position.
- Working with suppliers to uncover innovative approaches to business problems
- Helping the business’s speed to market
- Helping to achieve CSR goals
- Understand corporate risk and acting appropriately
- A perspective that extends beyond the 4 walls of the P&L
- Results that benefit all functions and parties in place
- A key enabler for procurement transition to the future