Wednesday, August 26, 2009

Welcome to the New World of Spend Management (or the world you just noticed!)

As history and B-school case studies reveal, it is often only through adversity that companies recognize and then embrace systems and processes that make them "better" but were there all along. Take, for example, the somewhat esoteric term, "spend management" in the business community. This term is now on the lips of CFOs, controllers, CEOs, finance directors, etc., across the globe. But why now? Or, more important, why not earlier?

C'mon, let's face it, we rarely try to change things up when we are fat and happy, right? you know how the old addage goes, "If it ain't broke ..." The truth of the matter is, though, that spend management practices and initiatives have been around for decades. The glaring difference now is that companies seek to incorporate them into EVERY aspect of their business. A concept too long in coming (and, for many, too late).

What we find in the logistics spend management space (see, there ya go; every aspect of your business!), are companies working diligently to find resources to get lean but to get SMART as well. For example, and on the one hand, a medical device company in New Jersey works with PA & Associates to get "lean" in its logistics environment with a parcel carrier agreement negotiation project that saves the company hundreds of thousand of dollars. But then, on the other hand, the same company takes it a step further and gets "smart" by managing that spend area moving forward with better software and analytics, and, therefore, better practices in the environment. The same could be said of a PA client in Omaha, Nebraska that availed itself of PA's wildy successful domestic parcel negotiation project and followed it up by implementing savings projects for its international freight spend under PA's direction and counsel.

With spend management as a ubiquitous term in our present condition, one also finds unqualified peddlers preying on the hopeful CFO like vultures on a carcass. At the end of the day, however, working with a true solution-providing consultant is all about trust and value, two of the more hackneyed terms today. But, like beauty, you will know trust and value when you see it.

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