Proxima Blog

The FT recently ran a piece called “Businesses unaware of supply chain risk*” which followed on from the Bangladesh garment factory fire (killing over 600 people, spurring a fierce public reaction). And just this week, days after the FT article was published, news of a Cambodian shoe factory collapsing, killing at least two people, hit our headlines. These catastrophic events come just weeks after the horse-meat scandal and within memory of the Japanese earthquake disrupting car supply chains.

Cost management techniques have been quietly evolving in the back offices of financial services businesses. It’s time for the new model to emerge.

Something has to change.  Retailers face being subsumed by the economic conditions, drawing on increasingly limited funds for reinvestment back into their businesses.  But sustained sector growth seems a small dot on the horizon.  There will always be the trend-buckers and those that insulate themselves from the worst of the high street maelstrom, but for everyone else, it is time to think differently about how profits can be boosted from sources closer to home.

Proxima has today announced the launch of a brand new online resource to help Financial Services professionals charged with managing costs and supply within their organisation.

Today, businesses are exposed to dynamically changing market conditions, regulatory pressures and increasingly intense competition (particularly from international markets). And since 2008, companies have focused heavily on headcount reductions and slashing budgets to improve balance sheets. But once these traditional means of cost reduction had been exhausted, there was, among some senior management, an attitudinal change to the concept of cost management.

Cost management and 'cost-out' is critical for any business. As such, cost as a metric will always be near the top of the agenda for any business assessing the performance of their procurement or sourcing function. However, driving costs out of a business is not a one-off project - it's a continuous, evolving process.

It’s not my fault. It wasn’t me. Sound familiar? These are common excuses we’ve used since childhood. And while they may pass in many circumstances of private life, they don’t often fly in the corporate world. Pointing the finger usually doesn’t protect shareholder value nor avert corporate reputational damage.

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).

Supplier relationships are obviously vital to a sound procurement strategy. But for Clive Rees, Chief Procurement Officer at betting giant Ladbrokes, keeping internal stakeholders close is just as important.

Procurement adds value by offering transparency into where and how a business spends its money. But when it offers “an understanding of what is driving a particular spend pattern… where the demand is coming from and how can it be managed effectively,” it can really start to deliver both strategic and tactical benefits.