Compulsive Contributors: Accenture Research and Insights into High Performance in Procurement

New research from Accenture shows how procurement masters are moving beyond cost savings to a total value approach. Learn how they are pushing the boundaries to achieve high performance.

All over the world, the capabilities of procurement organizations are being tested as never before. They are required to help their businesses deal with the impact of globalization, supply market volatility, supply chain disruption, rising costs of raw materials, regulatory overload, talent shortages and much more.

In 2011, Accenture conducted a study of 432 procurement organizations in companies across a broad range of industries around the world. We supported the quantitative findings with insights accumulated from Accenture’s longtime monitoring of leading practices and our interactions with some of the world’s most thoughtful procurement officers. Our analysis covered six key dimensions of procurement: strategy, sourcing and category management, supplier relationship management, requisition to pay, technology enablement, and workforce and organization.

We found that a group of “masters” outperformed the weighted average composite score of the total respondents. These masters are set apart from the “contenders” by their strong commitment to excellence in every dimension. Masters have moved from a total cost of ownership approach to one that strives to contribute to social, environmental and innovation agendas (total value of ownership). 
 

• Seventy-seven percent of masters ensure they have a procurement strategy that is integrated with the corporate strategy—as compared with 29 percent of contenders.
  
  
• Ninety percent of masters provide value over and above cost savings as part of this strategy.
  
  
• Two-thirds of masters look beyond their first-tier suppliers to collaborate and improve their businesses—only 11 percent of contenders have the same broad view.
  
  
• Only 18 percent of contenders actively monitor their suppliers’ performance as compared with 60 percent of masters.
  
  
• Eighty-one percent of masters have integrated the end-to-end source-to-pay process with technology, compared with only 34 percent of contenders.
  
  
• Although masters are better at developing and attracting the best talent, only 40 percent have formal talent development programs.

Based on an analysis of the results, Accenture has identified the hallmarks of procurement mastery:

• Masters “get” strategy and they practice it.
  
  
• Masters integrate effectively with their supplier networks.
  
  
• Masters excel at sourcing and category management.
  
  
• Masters manage more of their spend.
  
  
• Masters attract and retain the best talent. This is one category in which masters must do more.

In their quest to raise the profile of procurement within their organizations, executives of high-performance procurement organizations have become compulsive contributors, constantly looking for ways to drive revenue growth as well as drive cost savings.

The 2011 Procurement Mastery research, combined with Accenture’s additional research and experience on specific topics, enables us to highlight areas where we consider the compulsive contributors may drive performance excellence over the next five years. We anticipate that there is potential for masters to make substantial advances in the following four areas:

• Risk management. The masters are developing risk management programs to better anticipate and plan for disruptions in the supply chain.
  
  
• Advanced analytics. For masters, analytics will be a key focus for investment to address an increasingly complex business environment.
  
  
• Spend management. A few top procurement organizations are working together with the finance function to manage both demand and supply, thus closing the loop on spend.
  
  
• Transforming workforce capabilities. Talent management is a challenge even for the masters, but a few organizations are leading the way. Their talent acquisition and management programs are likely to become the prototypes for their entire industries.

Business leaders have already begun to embrace the wider contributions being made by the procurement masters. The research also shows that procurement masters are not standing still, but are actively pursuing new ways to continue adding value.

Accenture has extensive experience in helping procurement organizations achieve high performance.