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Showing Value (Part VI)

By Robert A. Rudzki, SCMR Contributing Blogger
February 10, 2012 - SCMR Editorial

At the end of the last posting in this series I mentioned the need to make budget adjustments to preserve negotiated results and ensure that they make it to the bottom line. This is an important topic, so let’s spend some time on it.

All too often, after a long and productive sourcing initiative, the team celebrates success when the new contract is finalized. The best efforts don’t end there. They continue with a well-developed implementation plan. And, that plan includes – among a long list of actions - involving the finance and accounting folks in ensuring that negotiated benefits make it to the bottom line.

Without a pro-active approach on budget adjustments, this is what typically happens: the new contract creates favorable variances at the cost center level, and the individual cost center manager has the freedom to spend that favorable variance on other things. As a result, no-one can “find” the benefits from the new contract on the bottom line. This is especially true with indirect materials and services.

When I present at conferences and ISM dinner meetings, I sometimes ask whether companies regularly adjust budgets for new contracts. Most do not. If your company is in that category, you can improve your value-add, and your credibility, by starting now. Involve your finance and accounting partners – they have as much at stake as you do.


(Note: portions of this blog series are based on the author’s new book “Next Level Supply Management Excellence” – a sequel to the bestselling book “Straight to the Bottom Line®)



About the Author

image
Robert A. Rudzki
SCMR Contributing Blogger
Robert A. Rudzki is a former Fortune 500 Senior Vice President & Chief Procurement Officer, who is now President of Greybeard Advisors LLC, a leading provider of advisory services for procurement transformation, strategic sourcing, and supply chain management. Bob is also the author of several leading business books including the supply management best-seller "Straight to the Bottom Line®", its just-released sequel "Next Level Supply Management Excellence," and the leadership book "Beat the Odds: Avoid Corporate Death & Build a Resilient Enterprise." You can reach him directly at: .(JavaScript must be enabled to view this email address).

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