Executive summary

Waking a sleeping sector

By Christopher Jahns, Hans Arnum et al

In many banks, purchasing and supply management (PSM) suffers from a “Sleeping Beauty” complex: it is inert, waiting to be woken up, say the authors from Germany’s Supply Management Institute and McKinsey. Initial findings of their global research study indicates that banks have far less control over total spend and a higher proportion of staff in transactional roles than in other industries – and hence plenty of room to improve. |

This benchmarking work, together with interviews with CPOs at five banks – Credit Suisse, Deutsche Postbank, Dresdner Bank, Nordea and Commerzbank – suggests that successful PSM functions in banks pay attention to seven fundamental rules.

Make PSM a strategic priority for top management.
Organise the PSM function around the best people.
Manage and develop the capabilities of individuals.
Play an active role in global sourcing, with a specific focus on outsourcing/offshoring.
Integrate supply risk management with enterprise risk management.
Use e-procurement and system software wisely.
Measure PSM efficiency and effectiveness to strengthen the position of the function.

With a strong focus on these dimensions, more banks could wake up from their slumbers.