Against the backdrop of global events, cost pressures, Procurement has a role to deal with rapidly changing stakeholders expectations.
Macro Economic Turbulence and unexpected shifts and cost structures have an impact on almost every industry.
One such method to revisit and review the costs (SG&A) is 𝗭𝗲𝗿𝗼 𝗕𝗮𝘀𝗲𝗱 𝗕𝘂𝗱𝗴𝗲𝘁𝗶𝗻𝗴.
𝗭𝗕𝗕 is a methodology that requires managers to plan each year’s budget starting at 𝗭𝗲𝗿𝗼.
This means completely disregarding what has occurred in past year and developing and justifying all budget line items from scratch.
Typically it would enable the Procurement Manager to analyze the following:
-𝙀𝙛𝙛𝙚𝙘𝙩𝙞𝙫𝙚𝙣𝙚𝙨𝙨 : 𝙋𝙧𝙤𝙥𝙤𝙨𝙚 𝙩𝙤 𝙨𝙩𝙤𝙥 𝙣𝙤𝙣-𝙫𝙖𝙡𝙪𝙚 𝙖𝙙𝙙𝙚𝙙 𝙖𝙘𝙩𝙞𝙫𝙞𝙩𝙮.
-𝙀𝙛𝙛𝙞𝙘𝙞𝙚𝙣𝙘𝙮: 𝘾𝙖𝙣 𝙬𝙚 𝙤𝙪𝙩𝙨𝙤𝙪𝙧𝙘𝙚 𝙩𝙝𝙚 𝙢𝙖𝙩𝙚𝙧𝙞𝙖𝙡/ 𝙎𝙚𝙧𝙫𝙞𝙘𝙚 𝙤𝙧 𝙢𝙖𝙠𝙚 𝙞𝙩.
-𝙎𝙩𝙧𝙪𝙘𝙩𝙪𝙧𝙚 : 𝙃𝙤𝙬 𝙢𝙪𝙘𝙝 𝙢𝙖𝙣𝙥𝙤𝙬𝙚𝙧 𝙖𝙣𝙙 𝙡𝙚𝙫𝙚𝙡𝙨 𝙩𝙤 𝙬𝙚 𝙣𝙚𝙚𝙙.
-𝙋𝙧𝙤𝙘𝙚𝙨𝙨: 𝘾𝙖𝙣 𝙬𝙚 𝙞𝙢𝙥𝙧𝙤𝙫𝙚 𝙩𝙝𝙚 𝙘𝙮𝙘𝙡𝙚 𝙩𝙞𝙢𝙚 𝙖𝙣𝙙 𝙖𝙪𝙩𝙤𝙢𝙖𝙩𝙚.
How do you view ZBB? Is it a short term thought? Is the process resource intensive?
Does justifying some expenses and reducing some enhances the credibilty of Procurement?
Would love to know your views. 😊
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