THE BUSINESS REVIEW FOR PROCUREMENT LEADERS
What separates the leaders from the followers in procurement today? That was the question posed by AT Kearney’s latest Assessment of Excellence in Procurement study. Covering more than 270 large companies across 25 industries, it found that 66 per cent now look to procurement to create value, compared with 28 per cent in 1999.
The study shows four key value approaches emerging in leading companies. The first is innovation and growth. More than half of automotive firms involve suppliers in the earliest stages of product development, versus 20 per cent of others. Second, through optimising the value chain. Here, nearly three-quarters of leaders and only a third of followers use joint cross-functional teams.
The third approach is advanced cost management. Collaborative cost reduction with suppliers is pursued by 78 per cent of leaders, but just 31 per cent of other companies. The final area is risk management and supply continuity. But whereas nearly all companies see business continuity as a strategic issue, only 40 per cent have a procurement strategy for it.
In terms of savings, the study finds that firms that invest the most in procurement capability enjoy significantly greater results across all categories.
