April 2013 |


With so much activity going on outside the direct control of an organization, it is in hindsight no surprise that there has been a reduction in the level of transparency of spending behaviors, and an increase in potential risks (both reputational and financial).

Recent topical events have offered new perspectives around the work we do for our clients.

First there was the recent activity around the mandatory audit rotation reform.  Then came the horse-meat scandal.

If you couple these with our own research into how modern companies spend two-thirds of their revenues with third parties, a picture quickly builds into the state of spending behaviors in large corporates – and how poorly it is aligned to corporate aims.

But what should we be doing about it?

Well, perhaps the best place to start is to accept that a new perspective is needed.  A perspective which focuses on understanding why your organization is spending money, rather than how much it is spending.  After all, ‘how much’ depends on why the money is being spent in the first place.  Feike Brouwers, former CFO of ING Direct, in a recent interview advises that the true value procurement can offer is “an understanding of what is driving a particular spend pattern… where the demand is coming from and how can it be managed effectively”.

Whilst the underlying theme here is transparency, wider issues of control, assurance and ultimately accountability of supply is increasingly becoming a board level agenda item.

So a good place to start to help with this thinking is ask yourself this question: how much ‘horse-meat’ is there in YOUR supply chain?