Tuesday, November 8, 2011

Boosting ROI; HP Needs a New Board

If there are three letters that confound the supply chain, they are ROI: Return On Investment. The most fundamental measurement of how well, or how badly, companies are spending their money, ROI is an evasive target in most procurement strategies.
Why is that? When you invest in equipment, it has a specific function -- test more chips in a given time span, for example -- which can be measured against existing equipment. More chips tested in less time is an increase in efficiency that can be measured in yield and therefore dollars and cents. An upgrade in something less tangible, such as software that can automate internal business processes, has more variables. What are the benchmarks for "I spend less time filling out paperwork?" In Boosting ROI in Procurement Technology Initiatives this week, James Thomas, strategic marketing manager at Zycus, addresses this problem:
A recent study of 600 procurement and supply management professionals representing companies with $370 billion or more of collective spending power found there are specific, and proven, tactics and strategies that are most effective for persuading people in corporate enterprises to adopt and use preferred procurement processes and technologies. According to the study, there are three benchmark indicators for achieving corporate and cultural adoption of procurement technology:
Stakeholder compliance with supply contracts and preferred procure-to-pay (P2P) processes
Active stakeholder participation in both strategic sourcing and supplier performance management processes
Procurement technology adoption and use
Thomas will take a closer look at these measurements in upcoming blogs.
Folks at the top of the corporate food chain, of course, are responsible for making investment decisions. The buck stops with the CEO; but CEOs are accountable to boards of directors and corporate shareholders. While chief executives get most of the credit (or blame) for a company's management, the board of directors decides whether a CEO is taking a company in the right direction. Considering some the decisions (or indecisions) at Hewlett-Packard Co., EBN editor-in-chief Bolaji Ojo doesn't mince words in his blog, HP Needs a New Board of Directors:
The board presided over a mess, fostered an atmosphere of executive incompetence at HP, and by its actions or omissions in leadership appointment and oversight helped drive one of the world's most innovative companies into a ditch. It has named Meg Whitman as CEO, even though she was previously on the board that sanctioned some bad investment and strategic decisions by her predecessor, Léo Apotheker.
One of those decisions was the spinoff of HP's PC business, a move that has since been reversed. The reasons for, and then against, the spinoff were vague, and after months of bad press and stock gyrations, HP is back to where it started: with the largest PC business in the world and no clear product strategy. Changing CEOs is not going to solve this problem, and a board should be a help rather than a hindrance to its executive leadership. Ojo's blog makes the case for more changes at the top.
Also this week, contributing editor Laurie Sullivan looks at some of the problems associated with on-demand manufacturing in OEMs, Retailers Push On-Demand Manufacturing. One of her examples comes from the auto industry, which is trying out new technologies with limited success. (See: MyFord Touch: Not Ready for Prime Time .) And as always, Ford Kanzler provides a unique perspective on high-tech marketing strategies (or lack thereof) in You May Not Have a Marketing Strategy if… Part One.

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