Yet despite the tremendous impact that strong spend management can have in value creation, the reality is that in many sectors, procurement is still primarily a transactional function with a limited scope of influence. To unlock the full potential, these elements must be applied comprehensively (exhibit). People create and sustain change. McKinsey & Company research has confirmed that procurement pays: Companies with high-performing procurement functions consistently outperform their rivals on a range of financial indicators, and the best companies are building advanced talent management strategies into … The best approach, he says, is to view outsourcing as a specific case of procurement, and to remember that it is a strategic, organizational func-tion. Flip the odds. The company gains the benefits of improved forecasting and budget planning and clear visibility into how procurement influences the P&L. Intelligent spend engines. The purpose is to identify industry-specific best practices and trends in the Procurement space, as well as to quantify key operational metrics for comparison of participants We gathered and evaluated 53 quantitative benchmarks* and qualitative practice points Most metrics and practices were organized along three primary themes: VALUE CREATION Public Procurement Practice CYBERSECURITY FOR PROCUREMENT In general, a cybersecurity plan should: n Be regularly updated. In an agile organization, category-specific managers are replaced by a working group of managers that perform negotiations for different categories, depending on variables such as the timing of the negotiation and the required expertise. Digital upends old models. Here, we describe the most advanced solutions relating to each element. 3. The time is right to do a thorough assessment of supply-chain risks and manage them more thoughtfully. Procurement leaders will also want to step up on the soft skills required to cultivate solid partnerships with suppliers and to collaborate more effectively with internal functions across the business in a more agile manner. A cloud-based platform enables all functional departments to share information in real time, while a “control tower” can monitor impact. As of this writing, many of the world’s largest economies were experiencing record-breaking economic contractions. One global electronics manufacturer conducted a detailed stress test of its supply chain, finding that around a quarter of its spend was at high risk—concentrated in three critical component categories. Spending is often fragmented among multiple locations, business units, and categories, making it hard to identify and capture enterprise-wide savings opportunities. What are the procurement best practices in this market? If you would like information about this content we will be happy to work with you. 2) McKinsey Global Institute Report - A labor market that works: Connecting talent and opportunity in the digital age This consulting slide deck is thoughtful because if you look at slides 30 - 33, it gives an actionable plan and recommendations for each unique stakeholder. These benefits, in turn, allow the company to more accurately identify the level of funds available to reinvest in growth and strategic projects. Determine PSM Best Practices. The foundation of the process is a budget-creation tool powered by software that applies zero-basing policies. SIG (Sourcing Industry Group) is the premier global sourcing association, founded in 1991 that provides thought leadership, networking and training opportunities to executives in sourcing, procurement and outsourcing from Fortune 500 and Global 1000 companies. The comprehensive suite of digital solutions that we have discussed has enabled cost savings of 15 to 20 percent. But these are just the starting point. The tool is supported by a basic finance boot camp. McKinsey & Company research has confirmed that procurement pays: Companies with high-performing procurement functions consistently outperform their rivals on a range of financial indicators, and the best companies are building advanced talent management strategies into the very heart of their procurement … Even so, they have not yet been widely adopted, making them a source of competitive differentiation for companies that adopt them today. Adopting an agile operating model could help procurement functions scale up or down quickly to respond to sudden supply challenges. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Learn more about cookies, Opens in new The biggest challenge of IT Asset Management is centralizing each asset’s lifecycle. The best procurement organizations in the world are intently focused on creating value in their extended supply chains, and they are very good at measuring this value. Online B2B platforms—such as Alibaba, Amazon Business, and ThomasNet—are e-marketplaces that are used for supplier evaluation and selection, cross-category orders, and financial traceability. Reinvent your business. According to our research, in the five years immediately following the 2008 global financial crisis (GFC), total return to shareholders (TRS) for companies with top-quartile procurement capabilities was 42 percent higher than for companies whose procurement operations were in the bottom quartile (Exhibit 1). Analytics as self-standing enablers play a stronger role provide Industry-focused Assurance, Tax and Advisory services enhance... 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