Short-Term Value Based Projects Can Justify Larger Technology Projects

Supply and Demand Chain Executive’s article on “2008 Supply and Demand Chain Executives Pros to Know” related the story of James Polak, Director, General Purchasing, PPG Industries. My background in spend analysis revealed a difficulty in getting firms to understand that there are tremendous savings in enabling corporate wide visibility of spend. PPG originally believed the same thing:

“In the early days of enabled spend analysis, around 2000-2001, segments of PPG believed that the project was a waste of capital and that there were no leveraged savings to be had.”

Polak made inroads into this area where he knew great savings existed by:

1. Forming purchasing teams that included factory and other non-purchasing members to leverage spend analysis beyond commodities.

2. Setting an arbitrary spend reduction target of 10% in 90 days.

The results were not only millions of dollars of spend reductions (up to 32%!) but a culture change that professionalized purchasing within PPG.

As they increased their spend analysis capability they technology enabled it further with a large, now justifiable, software and business process change project.

Another fascinating development is Jim’s personal evolution as a recognized spend analysis expert who uses his skills to reveal opportunities to buyers and managers:

“The message has become, “If Jim has time to look at my commodity and spot opportunities, then certainly I have the time to do the same.”"

Projects related to spend analysis can be high impact but many times lack the management skills required to kick them off. Jim’s experience reveals that value-based team projects driven by short-term targets can result in the justification needed for large scale technology projects.

Have you used the technique of a short-term (less than 90 day) project to prove savings in an area? Did you use it to justify a larger technology enablement project? Do you view Jim’s experience an example of great change management?

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