Managing Indirect Spend. Joe Payne

Three focuses on ways to achieve savings without negotiations by purchasing more efficiently and utilizing easy‐to‐manage tracking and scorecarding tools.

      Part Four: How to Do It

      In Part Four, we provide insights and sourcing strategies for specific indirect spend areas. Some of these include office supplies and telecommunications services. Each spend area is detailed in its own chapter and provides an industry overview with sourcing strategies you and your company can use to produce the optimal result.

BEGINNING YOUR JOURNEY

      As you read through the book, keep in mind that the methods and processes we discuss are not rigid instructions that you should apply to your organization. Just as markets are ever‐changing and flexible, so should your strategies. Start thinking about how to apply these concepts in the most effective way based on the objectives, constraints, and culture of your own organization. You can only successfully transition from process to profit by customizing your sourcing strategy based on your own unique internal considerations and restrictions.

Acknowledgments

      SPECIAL THANKS TO BENNETT GLACE. Without his mastery of the English language and attention to detail, this book would be virtually unreadable.

      We'd also like to thank Kathleen Jordan and Scott Decker, who contributed to the first edition of Managing Indirect Spend. Much of their contribution remains intact in this edition.

About the Authors

      JOE PAYNE

      Joe has dedicated the last 20 years to helping improve the procurement and sourcing function within midmarket and Fortune 1000 companies. Over that time, Joe has held several positions, from leading a consulting organization dedicated to the build out of indirect procurement functions to most recently running a business unit that provides technology, advisory, and managed services support to enhance and improve the full source‐to‐pay life cycle.

      During his career, Joe has developed insight into the challenges that organizations face when undertaking initiatives to reduce costs in the area of indirect spend and create sustainable procurement value. While reviewing the consulting market and existing printed publications, he identified a gap in this critical component of business and created the idea for this book.

      Joe is a long‐standing contributor to the Strategic Sourceror blog and leads discussion groups and brainstorming sessions at various training seminars and networking events.

      Joe holds a bachelor of science degree in operations and information management from the University of Scranton.

WILLIAM R. DORN

      William R. Dorn or “The Bill Dorn” as most call him, started his career in manufacturing and mechanical engineering before transitioning into technology, automation, procurement, and operations. Bill subsequently helped transform Source One into a leading consulting firm known for delivering high‐quality procurement advisory, sourcing technologies, and strategic sourcing managed services. Bill and Joe started in the weeds, conducting hundreds of sourcing events, building a library of best practices, and later focusing on building and scaling the business itself. Bill and Joe later became partners at Source One. Bill focused primarily on operations, finance, sales, marketing, product management, and information technology. In 2018, the business was sold to a growing financial services technology company, Corcentric, in order to build out a complete source‐to‐pay solution offering.

After participating in the sale of Source One, Bill stayed on after the acquisition and took on a new role within the organization, managing the upstream product strategy for Corcentric. Corcentric subsequently acquired Determine, a P2P SaaS provider where Bill then led the technology teams focused on sourcing, analytics, contract lifecycle management, and supplier portal and supplier performance management.

      Bill holds a bachelor of science degree in information technology, an associate of arts degree in electronics engineering, and is a certified Six Sigma Black Belt.

DAVID PASTORE

      David is a procurement thought leader. For 15 years he has lead teams of consultants who help midmarket and Fortune 1000 companies manage their most complex and strategic spends and supplier relationships. David's work focuses on elevating the role of procurement to become a leader and create a competitive advantage in clients' respective industries.

      David contributed to the first edition of Managing Indirect Spend and regularly writes for the Strategic Sourceror blog. His work has been featured in numerous publications, and he speaks regularly at industry events.

      David graduated summa cum laude with a bachelor of science degree in management information systems from Lock Haven University of Pennsylvania. He has a remarkable sense of humor, which he prefers to keep to himself. He lives in Pennsylvania with his wife, Nettie, and two dogs, Gary and Gray.

JENNIFER ULRICH

      Recognized industry‐wide as an authority on procurement, finance, and digital transformation and category management, Jennifer boasts more than a decade of consulting experience. Jennifer provides cross‐functional procurement knowledge and innovative strategies necessary to develop top‐performing procurement and finance teams and realize long‐term savings. Her efforts have also included developing customized training programs for strategic sourcing, contracting and negotiations, spend analytics, procurement process redesign, and supplier relationship optimization.

      Throughout her career, Jennifer has worked on both sides of procurement as an end user in a previous role and now leading a team of advisory consultants in the areas of procurement and finance transformation, digital transformation, and change management.

      Jennifer is a regular contributor to the Strategic Sourceror blog, actively participates in industry‐leading publications and events, and has a bachelor of science degree in marketing and a master of business administration from the University of Phoenix.

PART I The Process

CHAPTER 1 An Introduction to Strategic Sourcing

MANY AUTHORS HAVE ALREADY WRITTEN on Strategic Sourcing and Supply Chain Management. In general, each describes a sourcing process that includes somewhere between five and seven steps. The primary differences among their books are in the ways those steps are defined and segmented. The process described in this book should look familiar in that it includes six steps, starting with the inception of the initiative (Project Kickoff) and concluding with final monitoring of the implemented program (Continuous Improvement). This book's process, however, specifically applies Strategic Sourcing techniques to indirect spend categories and offers insights and strategies that have been applied successfully for decades. Our process is not based on theory; the techniques described have been refined through years of experience alongside many types of organizations to reduce their costs for indirect goods and services. As you will discover, the process itself serves primarily as a project management tool. Creative strategies and adaptability in the face of uncertainty are the key elements that make your sourcing initiative truly strategic.

      In the first edition of this book, published back in 2010, we noted that many organizations still neglected to apply Strategic Sourcing techniques to their indirect spend categories. Instead, indirect spend was treated as a series of one‐off purchases or was sourced with a simple three‐bid strategy with little effort beyond reviewing the supplier price responses. Typically, with indirect spend, per‐item prices are relatively low, the product or service is