Outsourcing and Procurement Mastery

Accenture research shows that leading companies use outsourcing to achieve procurement mastery, thus supporting their drive for high performance.

Procurement has become a strategic, proactive process that contributes to profitability, corporate growth and competitive advantage. While some companies appear to be leveraging procurement for greater business value, many others have not seized this area of opportunity.

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Accenture surveyed more than 600 procurement executives to find out what characteristics procurement masters have and how they use outsourcing to achieve high performance through procurement.

The research sets out to define, quantify and present examples of procurement mastery. This allows companies to gauge their own level of competence in this area and provides a framework for improving procurement performance, regardless of their current levels of competence.

Outsourcing can be an enabler to achieve procurement mastery and the survey concludes that if the full potential of procurement is to be realized, companies must transform the procurement function from a business support role to one of value generation.

This Accenture research shows that procurement mastery does contribute to high performance. Mastery in this area is a clear predictor of superior performance across the five procurement metrics used in the study:

• Total-cost-of-ownership (TCO) savings.
• Percentage of spending controlled by procurement.
• The ratio between total-cost-of-ownership reduction and procurement operating costs.
• Percentage of new product designs/introductions in which procurement has a material role.
• Share of suppliers managed through a formal process.

Procurement masters excel across all six of the functional components that Accenture measured:

• Procurement strategy.
• Sourcing and category management.
• Requisition to pay.
• Supplier relationship management.
• Workforce and organization.
• Technology.

A common theme that stands out in Accenture’s procurement research is the need to develop and maintain an enterprise wide view of the business. In fact, the ability to take this broader view is a defining characteristic of procurement mastery.

Based on its experience in procurement outsourcing, Accenture advises the following:

• Realize the potential of the procurement function by transforming procurement from a support function to a value-generating function.
  
  
• Make use of service providers both to generate efficiencies and to create a more global procurement perspective.
  
  
• Take advantage of the important capabilities available to procurement executives through outsourcing, which include: skills and expertise across spending categories and procurement processes; technology and process innovation; and better supplier relationship management.