Digital Dealer - February 2019 - 11

EMPLOYEES WILL REALIZE THAT THEIR ABILITY
TO ADD SUPPLIERS AT WILL HAS BEEN REPLACED
WITH A NEW PHILOSOPHY OF STANDARDIZATION..."
2. LIMIT COMMITMENT AUTHORITY. Em-

ployees can spend money
in three ways: through a
contract, a purchase order
or approving an invoice.
Realistic limits should be
established by selected titles within an organization
and then communicated
clearly. You are essentially
taking authority away from
everyone, then delegating
limited authority back to
selected employees when
they operate within prescribed guidelines. Result:
Clear authority levels and
less confusion and less
organizational risk.

3. OPTIMIZE THE
SUPPLIER BASE. 3,000

suppliers will result in
36,000 checks per year
for an organization using
only 100 expense categories, resulting in far more
back-office expenses, and
management headaches
than necessary. Narrow
the supplier base to the
best, most cost effective,
service-oriented supplier in each category and
leverage that supplier
across the organization.
Result: Fewer invoices to
approve, fewer checks to
cut, and better pricing due
to increased leverage.
4. COMMUNICATE
YOUR PREFERRED
SUPPLIERS TO
EMPLOYEES. To provide

clarity and reduce con-

fusion, communicate who
your preferred suppliers are
in each expense category
across the organization.
Result: Employees will realize that their ability to add
suppliers at will has been
replaced with a new philosophy of standardization,
and supply-base growth
will slow to a crawl adding

The above are just five
examples of where leadership can alter some existing
structures with policy
changes that will provide
clarity among management
and employees, guidance
relative to their position
responsibilities, reduce risk
and drive new efficiencies
and effectiveness...by sim-

NARROW THE
SUPPLIER BASE TO
THE BEST, MOST COST
EFFECTIVE, SERVICEORIENTED SUPPLIER
IN EACH CATEGORY
AND LEVERAGE THAT
SUPPLIER ACROSS THE
ORGANIZATION."
simplicity and reducing
back-office expense.

5. NEGOTIATE
FIXED PRICING FOR
HIGH USAGE ITEMS/SERVICES. It is far more effi-

cient and cost effective to
quote and negotiate pricing
once per year across a category than shopping prices
and suppliers continuously.
Result: Fewer interruptions
from suppliers seeking
business, fewer meetings,
and fewer internal employees spending their time
shopping for low-cost items
when they can be taking
care of clients.

plifying the complex.

SUMMARY -
BEST PRACTICES

Change agents make
things happen. Caretakers watch things happen.
Regardless of your personal
leadership and management style, it is incumbent
on leaders to plan, organize, direct, and control. It is
also incumbent on leaders
to realize when there are
inefficiencies in the organization, confusion or complexity and then take steps
to resolve those issues.
Take a look at how your
organization spends money
D I G I TA L D E A L E R . C O M

with your suppliers. Is the
approach organized? Is
the approach systematic?
Do employees know their
boundaries or limits? Are
those boundaries effective?
Are you observing the
problems around you
and doing anything about
them? Change agents are
not afraid of breaking some
eggs and reinventing processes, controls, and even
organizational structures
if the situation warrants it.
If you are interested in a
set of spend management
best practices that can help
you 'break some eggs' and
simplify the complex, email
daustin@strategicsource.
com.
DOUG AUSTIN is the
founder and president
of StrategicSource, Inc.,
the leading provider of
spend management
services (strategy, spend
mapping, sourcing, process
improvement, and audit) for
the automotive and truck
dealerships, and various other
vertical markets. Doug is a
veteran of the U.S. Marine
Corps, a graduate of the
University of St. Thomas,
and a speaker at various
conferences, 20 Groups,
seminars, and webinars.
Doug has acquired over
30 years of line, staff and
executive experience in spend
management and supply
chain management in various
vertical markets. Doug is also
a trainer, speaker, consultant,
and business owner. EMAIL:
daustin@strategicsource.com

FEBRUARY 2019

11
http://www.DIGITALDEALER.COM
Digital Dealer - February 2019

Table of Contents for the Digital Edition of Digital Dealer - February 2019
